What is ‘human rights and environmental due diligence’?

It is generally understood as the process for businesses to identify, prevent, mitigate, and account for the actual or potential adverse impacts in their global activities and value chains, which often involve subsidiaries, subcontractors, suppliers, and other economic transactions. Due diligence should include assessing and identifying such impacts, acting upon the findings to cease or prevent them, tracking the implementation and results, and communicating how impacts have been addressed.

 

The United Nations Guiding Principles on Business and Human Rights (UNGPs), adopted in 2011, enshrined due diligence as the operational principle to put the companies’ responsibility to respect human rights into practice. Other relevant international standards include the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the Council of Europe Recommendation of the Committee of Ministers to member states on Human Rights and Business and the OECD Guidelines for Multinational Enterprises. However, these standards remain voluntary and evidence shows little compliance.

 

An effective and comprehensive legal framework requiring companies to implement due diligence, with a strong role for trade unions, workers’ representatives and all other stakeholders, a strong liability and enforcement regime and improved access to remedy and justice, is essential in order to mainstream responsible business conduct, enhance access to justice for victims of corporate abuse, in and outside Europe, help state authorities meet their duty to protect human rights, and improve companies’ risks assessment and management.

 

In April 2020, the EU Commissioner for Justice, Didier Reynders, officially committed to an EU initiative on sustainable corporate governance, including corporate due diligence rules. In October 2020, the European Commission launched a public consultation to collect the views of stakeholders with regard to this initiative. A legislative proposal is expected in 2021. In parallel, the European Parliament, which has previously stressed the need for such legislation in several occasions, is now working on a relevant legislative report.

 

The EU already included some due diligence elements in certain legal frameworks, such as the Timber Regulation and the Conflict Minerals Regulation, which establish due diligence obligations for importers of timber and certain minerals, and the Non-Financial Reporting Directive, which establishes companies’ disclosure obligations on human rights risks and measures.

 

Some states have likewise adopted corporate due diligence legislation, such as the French Duty of Vigilance Law, adopted in 2017, and the Dutch Child Labour Due Diligence Law, adopted in 2019. Others like Germany, Finland and Luxembourg, are currently exploring similar rules.

 

Relevant resources