Business and Human Rights Framework Adopted by Companies in Japan

When the Japanese government was considering adopting a framework for companies to protect human rights in their supply chains, lawyer Ayumi Fukuhara participated in the process.

“The Ministry of Economy and Trade established a study group to sit in on and discuss the contents of the guidelines, and I was one of the members of the study group,” said Fukuhara, an attorney with Nagashima Ohno & Tsunematsu in Tokyo.

The results of the process were Japan’s Guidelines on Respecting Human Rights in Responsible Supply Chains, which were released in September 2022. Although the guidelines are not binding, many companies are following them.

What’s in the Japanese Guidelines? 

The guidelines “are an effort by the Japanese government to implement the United Nations [U.N.] guiding principles on business and human rights, and the substance of the recommendations really replicates what’s in the U.N. guiding principles,” said Antony Crockett, an attorney with Herbert Smith Freehills in Hong Kong. 

The guidelines recommend companies do three things:

• Adopt a policy regarding respect for human rights.
• Carry out a due diligence assessment of human rights impacts within both the company’s operations and its supply chains.
• Take action to avoid adverse impacts uncovered by the due diligence assessment.  

The guidelines are similar to due diligence requirements in the European Union. The biggest difference is that the Japanese guidelines are nonbinding, while the approach in the EU has been to make such guidelines mandatory. 

How Widespread Is Implementation?

“As a matter of Japanese corporate culture, Japanese companies will take those guidelines quite seriously, and so far since they were introduced, there’s certainly evidence of that, in the sense of companies investing quite a bit of time and effort to go about implementing what the guidelines say they should do,” Crockett said.

Implementing the guidelines is especially prevalent among listed companies on the Tokyo Stock Exchange, Fukuhara said. However, some small- and medium-size companies, as well as businesses that aren’t listed, aren’t following the guidelines, she added.

There is a gradual move toward more widespread implementation of Japan’s guidelines because companies in the EU and U.S. often conduct human rights due diligence and require it if Japanese companies want to conduct business with them, Fukuhara said.

Katie Nadworny is a freelance writer in Istanbul.