7.3.2.4 Private transactions due diligence - integrating human rights?

Generally, as in capital markets transactions, a due diligence process in private transactions will cover the whole spectrum of subjects which are pertinent to the business that is the object of the transaction. Human rights issues are typically not issues that are listed in a due diligence questionnaire exchanged between the parties before the investigation commences (see Annex 7.1, in fine).1However, since many companies operate globally, human rights violations become a business risk relevant for consideration. Being accused of human rights abuse, or complicity thereto, is bad news for a company. It can severely damage its reputation.2 It therefore seems rational to include this subject in a private transaction due diligence process. If the due diligence investigation of the target business or future project reveals any human rights related problems, the entrepreneur or financier can deal with such issue in good time, accept the inherent risk or alternatively, back out of the intended transaction.