Human Rights Assessments Are Not Only Mandatory for Large Companies

The Draft Regulation of the President (“Draft Regulation”) on the Assessment of Business Entities’ Compliance with Business and Human Rights may require companies with fewer than 2,000 employees to undergo a human rights compliance assessment. Deputy Minister of Human Rights Mugiyanto Sipin stated that companies falling under this “conditional” category are determined by a decree of the minister.

“The conditional category is determined through Decree of the Minister of Human Rights based on a number of considerations,” Mugi told Hukumonline.

Mugiyanto explained that the classification of business actors into the conditional category takes into account the level of human rights risk and the negative human rights impacts arising from the company’s operational activities. In addition, considerations also include current human rights cases or issues, impacts on investment, and potential threats to security.

Based on the Draft Regulation on Business and Human Rights Compliance Assessment obtained by Hukumonline, the obligation to conduct a human rights compliance assessment is regulated in Article 4. This article divides human rights compliance assessments into two mandatory categories: companies employing more than 2,000 workers, and companies falling under the conditional category as determined by a decree of the minister. Meanwhile, business actors outside these two categories may conduct human rights compliance assessments on a voluntary basis.