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OHCHR recommendations to EU Commission on mandatory due diligence

"EU Mandatory Human Rights Due Diligence Directive: Recommendations to the European Commission", 2 July 2021

A. Introduction

...OHCHR welcomes the Commission’s announcements that it intends to introduce a new regime for EU-wide “mandatory supply chain due diligence”...

On 10 March 2021, the European Parliament passed a resolution (the “EP resolution”) calling upon the Commission to prepare and submit legislative proposals for EU-wide “mandatory supply chain due diligence” and setting out a number of suggestions as to what that legislation should contain... [T]his note focusses on the issues that seemed most pressing in light of the EP resolution, and especially the recommendations set out in the annex to that resolution (“EP model legislation”)...

The first part of this note is focussed on issues connected with the translation of human rights due diligence (as laid down in the UNGPs) into a binding legal standard. The second part addresses some specific themes concerning corporate accountability and remedy under the regime...

B. Human rights due diligence

1. Scope

OHCHR strongly supports the statements set out in the EP resolution about the need for human rights due diligence to encompass the entire value chain, both upstream and downstream...

2. Capturing the structure, sequencing and logic of human rights due diligence...

Each of these activities is critical to a robust and effective human rights due diligence process. However, the EP model legislation does not appear to fully reflect this process. OHCHR notes with concern the suggestion that a “due diligence strategy” (see Article 4(4)) is somehow separate from the identification and assessment process needed in order to determine whether an undertaking is or may be causing, contributing to, or directly linked to actual or potential adverse impacts (see Articles 4(2 – 4))...

3. Stakeholder engagement...

OHCHR welcomes the emphasis given to stakeholder engagement in the text of the EP resolution. However, some modifications will be needed to the EP model legislation to ensure that stakeholder engagement is properly integrated into human rights due diligence in the manner envisaged in the UNGPs...

4. The role of “leverage” in addressing risks...

The importance of the concept of “leverage” in the UNGPs does not seem to have been properly reflected in the EP model legislation. Article 4(7) appears to consider “leverage” only as a limiting factor in determining the scope of human rights due diligence exercises; whereas, it is actually of critical importance in helping to define the different opportunities and responsibilities an undertaking may have to address potential and actual harms.

As the Commission develops its proposal, OHCHR urges relevant EU bodies to give proper weight to the need for companies to proactively seek out ways to enhance their leverage, and then to deploy it effectively, as part of a comprehensive human rights risk mitigation strategy...

5. The purpose of human rights due diligence

As opposed to other forms of corporate due diligence, human rights due diligence is first and foremost concerned with the prevention of harm to people...

C. Corporate accountability and remedy

1. Corporate accountability and legal liability

As previously noted by OHCHR, it will be necessary to ensure that the design of the regime is capable in practice of delivering on the key aim of strengthening human rights due diligence by companies so as to prevent and address business-related human rights harms...

2. Non-State-based grievance mechanisms

OHCHR welcomes the emphasis placed on non-State-based grievance mechanisms in the EP model legislation... The provisions in the EP model legislation may need some reworking in order to bring them in line with the UNGPs and our ARP III findings. Some issues with these provisions, and some resources that will be useful in helping to rectify them, are highlighted below.

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