MPF public hearing discusses National Framework on Business and Human Rights

On August 29, 2024, the Federal Prosecution Office (“MPF”) held a public hearing to discuss Bill No. 572/2022, which seeks to create the Brazilian National Framework on Business and Human Rights (“PL 572/22”).

As the discussion is in its early stages, PL 572/22 will likely be significantly modified before a final vote and subsequent approval.

The hearing was held to discuss the responsibility of companies regarding human rights, addressing issues such as the need for regulation, corporate responsibility for violations, and the importance of adopting practices that respect and encourage human rights in business operations.

Experts, company representatives, and members of civil society attended the hearing and emphasized the need for a robust regulatory framework to ensure compliance with these practices.

We highlight below the main topics discussed during the hearing.

Context and perspectives

PL 572/22 aims to establish the Brazilian National Framework on Business and Human Rights, which will provide guidelines for applying Brazilian and international standards for the protection of human rights, and to foster public policies on the subject.

In this context, the main aspects of PL 572/22 involve government agents and institutions, including the justice system, companies, and financial institutions operating within the national and transnational territory.

Considering the principles of (i) universal human rights; (ii) the obligation of the State and companies to respect and protect these rights; and (iii) the importance of the suffering of victims of violations, PL 572/22 imposes obligations on the State and companies to prevent, monitor and repair human rights violations, with emphasis on joint and several liability throughout the entire production chain.

The PL also provides for:

• the creation of monitoring mechanisms;
• the companies’ obligation to submit periodic reports;
• penalties for companies that violate human rights, such as fines, suspension of activities, and loss of assets; and
• specific rights for people, groups, and communities affected by human rights violations, including the right to full reparation and prior consultation.

The bill is considered the initial step in an ongoing collective construction process to ensure respect for human rights in the context of business activities.

Significant aspects

More than 30 speakers attended the hearing, and they presented the opinions of the different players involved in the subject. The MPF will analyze these opinions to prepare a technical note for the National Congress.

We highlight the main topics discussed below.

Expanded Corporate Responsibility:

PL 572/22 obliges companies to immediately cease any activity that poses a risk of human rights violations to prevent damage from the outset of operations.

Participation and reparation for affected communities:

PL 572/22 highlights the importance of actively involving affected communities in reparation processes, including the obligation for companies to fund independent technical advice and guarantee inclusive and accessible popular consultations.

Protection of defenders of human rights:

The need to protect those defending human rights, especially those involved in denouncing violations, was emphasized. Thus, if the PL is approved, companies will have to ensure the safety of these individuals, which marks a significant advance in the protection of human rights within the context of business.

Audits and data integration:

Companies expressed concern regarding the overload of audits required by different contractors, suggesting the implementation of integrated auditing systems to simplify processes.

Challenges in inspecting suppliers:

Companies suggested that the complete inspection of their suppliers could be a significant challenge, especially for those with a nationwide scope that have hundreds and even thousands of suppliers, considering the numerous responsibilities that would arise from this obligation.

Sectoral approach and due diligence:

 The concept of “due diligence” is pivotal, and therefore, a specific sectoral approach has been suggested to improve effectiveness. If PL 572/22 is sanctioned, internal adjustments to companies’ compliance policies may be required.

Balance between punishment, guidance and incentives:

Company representatives also stated that PL 572/22 should be amended to seek a better balance between punishments, guidance and incentives, so that there is real support for human rights.

Labor area:

The main area of concern regarding the violation of human rights at work is the prevention of work analogous to slavery, for which the definitions of the inspection of suppliers and the definition of the production chain will be essential points.

MPF’s opinions:

Following the presentation of the topics above, the MPF pointed out that the text can be improved, highlighting the consensus at the hearing on the importance of a binding regulatory framework on business and human rights.

In addition, the MPF pointed out that PL 572/2022 is innovative but does not jeopardize legal certainty. It provides for situations that are already incorporated into the Brazilian legal system and highlights the need for independent technical advice in cases of reparation, a reparation fund, and a provision for quarantine of those involved in violations.

In addition, the MPF emphasized the importance of allowing the Public Defender’s Office and the MPF to control business activity externally and the need to provide a specific approach for small businesses.

Finally, the Federal Public Defender’s Office highlighted the importance of regulatory agencies, since human rights violations could be linked to unregulated economic activities.

Final considerations

While PL 572/2022 is still subject to amendments, companies must monitor the development of this regulatory framework and keep up with the main discussions on the topic so that they are not surprised by any changes in the applicable legislation. The proactive adoption of suggested measures could not only ensure future compliance but also place the company as a leader in human rights practices within the business environment.

Demarest’s ESG and Labor teams are monitoring new developments within the sector and are available to provide any further clarifications that may be necessary.