The U.S. National Action Plan 2.0: A Valuable Tool for Investors

By Meg Roggensack, Adjunct Professor, Georgetown University Law Center

Countries around the globe use National Action Plans (NAPs) on business and human rights to support implementation of the UN Guiding Principles on Business and Human Rights (UNGPs), the internationally agreed upon guidelines for States and companies to identify, prevent, and remedy human rights abuses in global business operations. In 2016, in response to calls from Member States, civil society, and other stakeholders, the UN Working Group on Business and Human Rights, tasked with promoting implementation of the UNGPs, issued guidance on the development, implementation and updating of NAPs on business and human rights, building on a 2014 report to the UN General Assembly on this theme. Countries have taken a range of approaches, as reflected in this resource maintained by the Danish Institute for Human Rights. Today, twenty-six countries have adopted NAPs to implement the UNGPs. These plans reflect emerging “good practice” - the value and necessity of a clear policy tool in enabling greater consistency, coherence, coordination, and collaboration by government together with external stakeholders around identified priorities for responsible business conduct.

The US launched its first National Action Plan on December 16, 2016, in the waning days of the Obama Administration. That plan was criticized by civil society stakeholders as “too little, too late,” a summary of existing efforts rather than a forward-looking policy roadmap. Its delayed release gave no time for implementation by the outgoing Administration. With the exception of enforcement of the forced labor import ban, its implementation was largely disregarded by the incoming Trump Administration.  

On June 16, 2021, the tenth anniversary of the adoption of the UNGPs, U.S. Secretary of State Anthony Blinken promised an update of the original NAP. Noting the important role of business in supporting democratic principles and influencing society and the environment, he acknowledged “we must go further in shaping the business and human rights agenda.“ Citing the importance of rule of law, governance, and respect for fundamental rights, he reflected on the crucial role of investors: “There also needs to be more attention on the leverage wielded by investors, including private equity, venture capital firms, and multilateral development banks to address human rights abuses, including those committed against environmental defenders.”

The second US NAP, officially released March 25, 2024 (NAP 2.0), is an important achievement and a step forward from the first NAP from 2016. Coordinating multi-agency consensus is challenging, and it is important to acknowledge the considerable commitment across 12 agencies and three inter-agency initiatives to make this policy roadmap a reality, as well as the extensive multistakeholder consultation that yielded actionable policy ideas.  

This NAP 2.0 provides greater coherence and attention to existing efforts, reflects greater interagency engagement and collaboration, and includes several elements specifically requested by civil society:  

• The creation of a Federal Advisory Committee on Responsible Business Conduct to ensure ongoing multistakeholder consultation on NAP implementation;
• Human rights due diligence as a basic expectation for responsible business conduct;
• A Responsible Business Conduct and Labor Rights InfoHub of resources and tools to support businesses to operate responsibly;
• Commitments to strengthen remedy mechanisms, including the OECD National Contact Point (NCP) and those associated with development finance, and;
• Strengthening existing use of federal procurement tools to combat human trafficking and forced and indentured child labor.

Active investors engaging with their portfolio companies to encourage rights respecting business conduct will benefit from this strong expression of the Executive Branch’s expectation that companies carry out human rights due diligence. The due diligence guidance is important for its clarity and consistency with existing frameworks - all companies (to include institutional investors), all parts of the value chain, and in line with internationally recognized standards including but not limited to the UNGPs, the OECD Guidelines for Multinational Enterprises, and the ILO‘s Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy. This is a floor, not a ceiling, to be further augmented by sector specific multistakeholder standards.

Other provisions that are particularly relevant to investors are the following:  

• Those relating to improving company reporting on human rights due diligence, led by the State Department to “evaluate and assess” potential approaches, building on existing public reporting models used by the US and other countries  
• Due diligence guidance to be developed for investors related to investments in technologies that could adversely impact human rights
• Additional business advisories on business activities involving countries, regions, or sectors with heightened human rights risks
• Among the range of workers’ rights commitments, informed by and building on the Administration’s Global Labor Strategy and a marker for expectations of business going forward, which may be useful in investor advocacy, are robust use of trade policy and other tools that effectively oblige companies to carry out human rights due diligence with respect to existing and prospective operations and sourcing. For example, the US Trade Representative has committed to a forced labor trade strategy to identify gaps and opportunities to strengthen existing tools aimed at combatting forced labor. The Department of Homeland Security plans to increase Withhold Release Orders and findings, as well as criminal investigations through increased coordination with its investigative division.  
• State-led efforts in coordination with other government agencies to broaden existing use of a range of tools including economic sanctions, visa restrictions, and export controls to promote accountability for human rights abuses by individuals and entities. 
   

Civil society stakeholders actively involved in this process have commended its inclusiveness relative to the first NAP process and its more robust, forward-looking actions, while at the same time noting the range of commitments lacking specificity or concrete deliverables.  

The ultimate test of this NAP’s effectiveness will be whether and how the various types of proposals are translated into concrete, measurable, and timely actions that change business behavior. The NAP is a policy document, not a legislative tool, and the human rights due diligence expectation it outlines is of necessity voluntary – although US forced labor import bans, economic sanctions, and other tools effectively require human rights due diligence to avoid enforcement actions and liability. However, companies with global footprints will be obliged – directly or through supply chain relationships - to undertake human rights due diligence because of Europe’s adoption of mandatory human rights and environmental due diligence initiatives at both the national (for example France and Germany) and regional (the recently passed Corporate Sustainability Due Diligence Directive) levels. As this NAP makes clear, companies confronting these changed realities can look to the U.S. government for guidance and support, through sustained and committed leadership, in partnership with other stakeholders, to innovate creative and workable approaches to promoting responsible business conduct