Since their 2011 adoption, the UN Guiding Principles on BHR (UNGPs) have had little impact on corporate behavior in Japan. Japanese business actors have had little awareness or interest in BHR issues both in Japan and in the countries where they operate. Moreover, the Japanese government has not actively promoted human rights in general. Noting the reliance of Japanese companies on global value chains and suppliers in so-called developing countries, such as in the garment, car, electronic, manufacturing, food, ICT, extractive and banking sectors, failures to address human rights in line with the UNGPs has been a fatal problem.

However, while largely soft law, there are several government initiatives to facilitate effective UNGPs implementation, including the following. 

First, in December 2020, the government established a National Action Plan (NAP) for UNGPs implementation. The Ministry of Foreign Affairs (MOFA) took the lead in this process. Although the NAP merely compiles what each ministry is doing for human rights vis-à-vis business sectors, it has increased industry support for the UNGPs. Second, in 2022, the Ministry of Economy, Trade, and Industry (METI) set up the “Guidelines on Respecting Human Rights in Responsible Supply Chains” (METI Guidelines) which aim to enhance the understanding and facilitate implementation of human rights due diligence (HRDD) in accordance with the UNGPs and the OECD Guidance. Third, in 2023, the government announced its efforts to ensure companies bidding for public procurement respect human rights by introducing clauses such as “Prospective bidders/contractors shall make effort to respect human rights based on the METI Guidelines in the bidding instructions and contracts for public procurement.” 

With respect to disclosure, Japan has not yet adopted legislation mandating company’s disclosures of non-financial information. However, the Financial Services Agency and the Tokyo Stock Exchange require listed companies to submit reports on corporate governance in accordance with the Corporate Governance Code. In June 2021, the Code was revisedto clearly incorporate the phrase “respect for human rights” and in particular to require boards of directors of prime listed companies to recognize “respect for human rights” as an important management priority. Accordingly, since June 2022 such companies must disclose their actions to respect human rights. The Code also requires such companies to disclose actions addressing climate change in line with Task Force on Climate-related Financial Disclosures (TCFD) requirements.

Impact of regulatory developments outside Japan

Various factors have contributed to these developments beyond Japan’s commitment to BHR issues adopted at recent G7 summits.

First is the influence of institutional investors. ESG (environmental, social, and governance) investment has been mainstreamed among institutional investors since the General Pension Investment Fund (GPIF) signed the Principles for Responsible Investment (PRI) in 2015. Moreover, foreign investors, more actively engaged in human rights, pressure the companies in which they have invested.

Second is external pressure from the influence of western regulatory initiatives. Three waves are noteworthy. The first wave was the UK Modern Slavery Act, which applied to many companies operating in the UK. The second wave came in May 2021 after the U.S. Customs and Border Protection agency blocked Uniqlo’s shirts entering the United States due to the import ban on forced labor products connected to China’s Xinjiang Uyghur Autonomous Region (XUAR). This incident alerted many Japanese companies to the global BHR regulatory trend. The third wave is the Corporate Sustainability Due Diligence Directive (CSDDD) legislative process in the EU. Japanese firms observing the process have more or less recognized that a move from soft-law to hard-law regulation is inevitable. Some have begun to believe that creating a CSDDD-like regulatory environment in Japan would be appropriate to level the playing field if the CSDDD is enforced for significant numbers of Japanese companies operating in Europe. In February 2024, the Japan Business Council in Europe (JBCE), representing over 100 large Japanese companies, and the European Business Council in Japan (EBC) issued a joint statement on sustainable and responsible supply chains. The statement refers to the CSDDD and calls for policy alignment between the EU and Japan. Nonetheless, opinions on a mandatory approach in the Japanese business community are far from monolithic as discussed later. 

Criticisms against a mandatory approach

Despite the above developments, Japan’s current approach is inadequate compared to global developments. The METI Guidelines are non-binding soft law imposing no obligation on companies to implement HRDD. While the revised Corporate Governance Code obliges listed companies to disclose human rights initiatives, public procurement contractors are only required to make “efforts” to implement the METI Guidelines-based initiatives, and there are no sanctions for violations.  

Neither the Japanese government nor major business associations have expressed their willingness to take further steps towards hard law regulation beyond ongoing initiatives. The dominant discourse among government and business actors hindering mandatory HRDD legislation is as follows. 

Firstly, it is argued that Japanese companies can already respond well with the current soft law approach. According to a survey by Keidanren, 76% of companies responded that they are “implementing initiatives based on the UNGP (including partial implementation and plans for implementation)”, up 40 points from the previous survey. This arguably shows that voluntary efforts are making steady progress. Secondly, since Japan’s major enterprises are small and medium-sized (SMEs), awareness raising and support for SMEs has priority for effective implementation of the UNGPs, rather than focusing efforts for elaborating mandatory legislation which only covers very large companies. Third, actual examples of mandatory HRDD laws, such as the CSDDD, are severely limited in their scope of target companies, and this is viewed as rather a setback for the UNDP, putting into question such an approach in itself. 

At the same time, the sentiment to reject a hard law approach is deeply rooted in Japanese companies’ anxieties. The following arguments have been made behind the scenes. Due to the “ambiguity” of the concept of HRDD, companies find it difficult to know what actions are required for specific situations, and they resist unpredictable duties and penalties. For instance, following Myanmar’s coup, companies working in Myanmar faced demands of “responsible exit” and “heightened HRDD”, but there was no clear indication as to whether they should withdraw or remain. There are also cases, such as the Uyghur issue, where companies feel caught between their business partners in China and US regulations, and the Japanese government has not specified whether or not forced labor is involved, nor guidance on how companies should react.

The Necessity of a Regulatory Approach

All of these arguments against hard law appear to be an evasion of the fundamental problem. First, the empty optimism that soft law can solve human rights violations by corporations ignores the reality. Although the Keidanren survey shows many companies have started initiatives based on the UNGPs, most actions are not genuinely aligned with what the UNGPs require for HRDD, such as stakeholder engagement, tracking results, and external communications. Rather than meaningful engagement with affected rights holders, many companies only adopt a human rights policy and express an intention to conduct HRDD in the future, and HRDD often only consists of shallow practices such as sending questionnaires to suppliers or outsourcing HRDD to consulting firms entirely. The HRDD process is largely in a black-box without an accountability mechanism. 

For instance, even after the METI Guidelines were introduced, when NGOs asked companies about their responses to the Uyghur issue, many gave only an abstract and meaningless answer such as “we will take action respecting human rights in line with our policy” without indicating whether or not they have business links to XUAR.  This indicates that HRDD is becoming a new tool for whitewashing possible violations. 

Further, the recent report of the UN Working Group on Business and Human Rights expresses alarm about embedded discrimination against minorities throughout  Japanese business, prevailing gender-based discrimination and harassment, and the extremely inhumane labor conditions of workers dealing with the Fukushima nuclear disaster, as well as technical interns.  It further expresses alarm over the culture of impunity for sexual violence in the media and entertainment industry which has been covered up by the relevant industry as a whole. These findings highlight the inadequate implementation of HRDD putting vulnerable rights holders at risk.

In this regard, the establishment of a supervisory authority to investigate and redress violations, as well as the introduction of civil liability, can be key to transforming the situation, both of which can only be realized through hard law.

Regarding emerging issues such as the Uyghur and Myanmar issues, the government should provide clear guidance of appropriate actions to companies. At present, the Japanese government fails to fulfill its duty under Pillar 1 of the UNGPs. A mandatory HRDD approach is necessary to fulfill the state’s obligation to protect human rights and to respond to the concerns of companies

Moving ahead

Japan’s reluctance towards a mandatory approach is a reflection of its longstanding culture of inaction and indifference to human rights issues at home and abroad. Japan has not sufficiently integrated a human rights perspective into its foreign and economic policy. There are structural problems including the fact that neither METI nor MOFA specializes in human rights; no ministry is in charge of human rights; and there is no national human rights institution (NHRI). Thus, it is still unclear which ministry will be the national focal-point for the entire BHR agenda, and no one is willing to exercise further leadership. 

Despite this situation, civil society action is worth noting. During the 2023 G7 Hiroshima Summit, Japanese NGOs joined global NGOs in calling for the adoption of a mandatory HRDD law (mHRDD) in Japan. Tokyo-based NGO Human Rights Now proposed a draft bill on mHRDD requiring certain large companies to conduct HRDD for their entire value chain and designating a supervising authority which conducts investigations upon petition and provides remediation. Further, the draft bill proposes a civil liability clause for breaches of the HRDD obligation. In response, the “Nonpartisan Parliamentary Association for Reconsidering Human Rights Diplomacy” expressed its willingness to propose a similar bill to the Diet. 

While it is worthwhile to learn from the progressive aspects of mHRDD legislation in other countries, the process of legislative development should be a chance to address Japan’s structural and institutional challenges, rather than superficially following the Western unilateral regulations. The voice and demands of rights holders across the globe are crucial in this transnational legislative development to prevent hegemonic dynamics which often appears in Western-centric legalization. (End)