Our team: Tim Wright
Didier Reynders, the European Commissioner for Justice, recently announced plans for new laws requiring EU companies to carry out mandatory cross sectoral corporate due diligence on their operations and global supply chains for all environmental, human rights and governance impacts.
Speaking at a European Parliament webinar hosted by the European Parliament’s Responsible Business Conduct Working Group on 29 April 2020, Commissioner Reynders stated that the new rules will be modelled on the French duty of vigilance’ law, which requires companies to show a ‘duty of care’ in their operations, investments and supply chains.
Whilst the details are still to be finalised, the new rules will require companies to carry out due diligence on their operations and supply chains in order to consider the risk of human rights and environmental harms. The legislation will also provide strong enforcement mechanisms against failing companies with the possibility of collective redress (i.e. class actions) for victims.
Welcoming the announcement, NGO Global Witness said that “strong EU action on corporate due diligence would send a clear signal that the EU is a global leader in protecting human rights and the environment. This leadership is needed more than ever. We are facing a global pandemic, and the existential threat of climate breakdown is looming. Both are crisis’ are leading to increased precariousness and suffering for people around the world. Corporations must do their part to mitigate this in their operations and along their supply chains.”
The new rules will build on a raft of national and EU legislation and initiatives including:
|National Laws||EU Initiatives|
|• S1502 of the US Dodd-Frank Act, 2010||• EU Illegal Timber Regulation, 2010|
|• California Transparency in Supply Chains Act, 2010||• EU Non-Financial Disclosure Directive, 2014|
|• UK Modern Slavery Act, 2015||• EU Regulation on Conflict Minerals, 2017|
|• US Trade Facilitation and Trade Enforcement Act, 2015||• European Parliament Resolution on impact of trade & EU policies on global value chains|
|• French Duty of Vigilance Law, 2017||• European Commission’s Action Plan on Financing Sustainable Growth, 2018|
|• Australian Modern Slavery Act, 2018||• Shadow EU Action Plan on Business and Human Rights, 2019|
|• Dutch Child Labour Due Diligence Law||• EU Regulation on sustainability-related disclosures in financial services sector, 2019|
DG Justice will launch a public consultation in the coming weeks, with the new legislation set to be introduced in Q1 2021 as part of the Commission’s Green New Deal.