The model we outline would amend the Corporations Act to introduce a standalone HRDD obligation, with four key components:
1. Statutory Duty to Undertake Human Rights Due Diligence
A new Part in Chapter 2D (which governs officers and their duties) or Chapter 2M (which governs reporting and disclosure) could impose a duty on directors of certain entities (defined by revenue or employee thresholds) to ensure that their company undertakes ongoing human rights due diligence. This duty would require directors to identify, prevent, mitigate and account for adverse human rights impacts linked to the company’s operations, consistent with the UN Guiding Principles on Business and Human Rights.
2. Integration with Director’s Duties (ss 180–183)
Although s 181(1)(a) currently requires directors to act in good faith in the best interests of the corporation, we argue that this concept is not inherently limited to financial interests. Building on recent jurisprudence (e.g. ASIC v Cassimatis (No 8)), we suggest that directors should be required, or at minimum expressly permitted, to consider the company’s human rights impacts as part of discharging their duties under s 180(1) (duty of care and diligence) and s 181.
3. Mandatory Grievance Mechanisms
Entities subject to the duty should be required to establish operational-level grievance mechanisms that meet the criteria set out in UNGP Principle 31 (legitimacy, accessibility, predictability, equitability, transparency, rights-compatibility). This obligation could be embedded through amendments to s 299(1) (directors’ report) and aligned with existing corporate governance disclosure frameworks under the ASX Listing Rules and the ASX Corporate Governance Principles and Recommendations.
4. Regulatory Oversight by ASIC
The Australian Securities and Investments Commission (ASIC) should be empowered to supervise and enforce the HRDD obligation, through amendments to Parts 3 and 9 of the ASIC Act 2001 (Cth) and relevant sections of the Corporations Act. ASIC’s investigatory and enforcement powers should be extended to encompass breaches of the due diligence obligation, with capacity to issue infringement notices, accept enforceable undertakings, and initiate civil penalty proceedings.
In effect, our proposal would align Australian corporate law with the expectations articulated in Principle 3 of the UN Guiding Principles—that States must ensure their corporate law frameworks do not constrain, and ideally enable, business respect for human rights.
Crucially, we also challenge the longstanding assumption that corporate law is an inappropriate vehicle for regulating human rights conduct. The dominance of shareholder primacy in Australian corporate legal theory has obscured the extent to which directors already have discretion to consider non-financial interests. Our review of statutory duties, judicial interpretation, and regulatory developments suggests that corporate law is not hostile to human rights—it is simply underdeveloped in this respect.
Embedding a human rights due diligence obligation in the Corporations Act would be a modest but significant step toward meeting Australia’s international obligations under instruments such as the International Covenant on Civil and Political Rights, the ILO Forced Labour Protocol (P029), and the OECD Guidelines for Multinational Enterprises. It would also bring Australia into line with the growing number of jurisdictions taking seriously the role of law in promoting the Sustainable Development Goals.
We are not proposing that the Corporations Act become a catch-all for every social harm. But where adverse human rights impacts are foreseeable, preventable, and connected to the operations or supply chains of Australian companies, corporate law must be part of the remedy.
To read our proposal in greater detail, see Vol 41(2) of the Company & Securities Law Journal.
Authors: Shelley Marshall, Tim Connor, Esmira Hackenberg and Claire Dudgeon
