EU Commissioner for Justice commits to legislation on mandatory due diligence for companies

On 29 April 2020, the European Commissioner for Justice, Didier Reynders, announced that the Commission commits to introducing rules for mandatory corporate environmental and human rights due diligence. The announcement was made during a high-level online event hosted by the EU Parliament’s Responsible Business Conduct Working Group, during which the Commissioner presented the findings of the Commission study on options for regulating due diligence requirementsYou can watch the webinar here.

MEPs, NGOs and other stakeholders welcomed the annoucement. In December last year, over 100 organisations had launched a campaign calling for EU human rights and environmental due diligence legislation. Further information is available below, on our mandatory due diligence portal, and in this blog piece by BHRRC's Phil Bloomer and ITUC's Sharon Burrow for Open Democracy on the Commission's plans for mandatory due diligence.

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29 May 2020

European Parliament RBC Working Group letter to EU Justice Commissioner on shape of possible future due diligence legislation

Author: European Parliament Responsible Business Conduct (RBC) Working Group

"EU is well placed to show leadership with its future due diligence legislation", 27 May 2020

The RBC Working Group has now followed up the Commissioner’s commitment with a detailed letter on how such future EU company law should be shaped...

In its letter, the Working Group reminds that the Covid-19 crisis has highlighted the precarious nature of global value chains...

To this end, the Working Group reiterates its support for the Commission to start shaping EU-level mandatory legislation which should be horizontal covering all sectors, and it should have effective enforcement measures and access to remedy for victims and affected communities through liability for harms caused or contributed to by businesses. 

The MEPs outline in their statement key principles to the forthcoming legislation:

  • Applies to all business undertaking of all size across the EU;
  • Includes the obligation to respect human rights and the environment in their own domestic and international activities, and to ensure such respect throughout their global value chains, products, services and business relationships; 
  • Ensures that business enterprises have an obligation to identify, prevent, mitigate, monitor and account for potential and actual human rights abuses and environmental harm​ ​in their entire global value chains;
  • Is supplemented by more specific standards and guidance that provide clarity and certainty to business and stakeholders about the processes and topics expected to be covered.
  • Establishes civil liability for human rights abuses and environmental harm and provide access to remedy for victims;
  • Provides authorities with effective instruments to monitor compliance and ensure enforcement, including through penalties and sanctions.

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Download the full document here

19 May 2020

Business and Human Rights: Mandatory human rights due diligence – European Commission to introduce a legislative initiative by 2021

Author: Sam Eastwood, James Ford, Libby Reynolds, Mayer Brown

On 29 April 2020, the European Commissioner for Justice, Didier Reynders, announced that the European Commission will develop legislation that would require EU companies to carry out human rights and environmental due diligence. The Commissioner confirmed that a legislative initiative would be introduced by 2021. Details of the exact legal mechanism will follow, but according to the Commissioner, any legislation would be "inter-sectorial, mandatory and of course with a lot of possible sanctions"...

Key takeaways

  1. The European Commission's commitment to a legislative initiative on mandatory human rights and environmental due diligence in 2021 is the latest development in an increasing tide of regulation on the topic of business and human rights.
  2. The Study acknowledges a number of non-legal incentives for carrying out due diligence, as well as identifying various benefits associated with introducing mandatory due diligence legislation. 
  3. The COVID-19 pandemic has underlined the importance of businesses carrying out human rights and environmental due diligence...

The Study also illustrated that there is a significant variance in how businesses currently manage human rights and environmental risks in their supply chains... Businesses should take note of emerging best practices to ensure they are adhering to their current and emerging human rights due diligence responsibilities.

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19 May 2020

EU Trade Commissioner Hogan commits to closely collaborating with Justice Commissioner Reynders on due diligence legislation

Author: Phil Hogan, EU Trade Commissioner

'Introductory Remarks by Commissioner Phil Hogan at OECD Global Forum on Responsible Business Conduct'

[W]e realise more than ever in the present crisis that it is important for businesses to integrate the interests of our workers, our society, and our planet into their operations...

[R]ebuilding the economy in an even more sustainable way is not just a plus, it is a necessity...

...I will be working hard with my fellow Commissioners in the coming months to drive different initiatives in the context of the post-coronavirus recovery.

While they have their origin in different policy areas, ...they share a common view that due diligence can be part of the solution for our businesses.

Companies with due diligence policies in place are likely to build more long-term value and resilience – improving their prospects for recovery.

Commissioner Reynders is leading the work on examining options for regulating due diligence, both in companies’ own operations and through their supply chains. He presented the outcome of a due diligence study in the European Parliament a few weeks ago.

His preference is for a mandatory, horizontal due diligence legislation with possible sectoral guidelines. He indicated that subject to the results of consultations with stakeholders, the Commission would table legislative proposals in 2021 and I will work closely with him on this, given the strong trade dimension involved...

The European Union stands ready to maintain its role of global leadership and build stronger partnerships around the world...

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13 May 2020

Milestone promise a positive step toward mandatory due diligence in supply chains

Author: Anti-Slavery International

[O]n April 29th, the European Commissioner for Justice, Didier Reynders made a milestone announcement for corporate responsibility. The Commissioner publicly pledged that the European Commission will introduce a proposal for legislation in 2021...

[T]he EU has considerable potential to take effective action to prevent forced labour in global supply chains. Over 16 million people are estimated to be in forced labour in the private sector, which includes those producing the materials in goods or products exported to the EU, as well as products produced in the EU...

The Covid-19 crisis has sharply exposed the need for this change...

Mandatory human rights and environmental due diligence would level the playing field...

The legislation we are calling for will change the state of play...

[W]e now need to ensure that the legislation proposed is robust and fit for purpose. The European Parliament’s Legal Affairs Commission will soon start work on its long-awaited Corporate Accountability and Due Diligence report... Germany, which will assume the rotating Presidency of the EU in July, should also place this issue high on the its Presidency agenda.

Anti-Slavery International has laid out our vision of the legislation to ensure it is effective in addressing forced and child labour...

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12 May 2020

Ensuring human rights and sustainability in company supply chains

Author: Isabelle Schömann and Claudia Saller, Social Europe

As the Covid-19 pandemic has hit the world—causing devastating impacts to human rights and laying bare the vulnerability of our economic model and uncontrolled supply chains—the European commissioner for justice has recognised the urgent need for corporate justice.

On April 29th, ... the commissioner, Didier Reynders, committed to an early 2021 legislative initiative on mandatory obligations for EU companies on human rights and environmental due diligence. This measure would encompass liability, enforcement and access to remedies for victims of corporate abuse. He said it would form part of the European Green Deal and the European Recovery Plan...

While Brussels has sent an important signal by taking steps in this area, member states retain the key role in EU decision-making. In Germany, the Netherlands, Finland, Luxemburg and others, legislators are looking seriously into human-rights and environmental due-diligence legislation for their country, as well as at the European level...

National governments must recognise their responsibility and their power to act. Any EU legislation will have to be implemented at national level, so governments are well advised to listen to their civil society and trade unions and start preparing such a supply-chain law at home. Work at the national and EU levels must go hand in hand if the result is to be a robust legislative framework, which ensures the protection of human rights and the environment throughout the entire supply chain...

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8 May 2020

Swedwatch welcomes EU human rights due diligence plans

Author: Swedwatch

The recent announcement by European Commissioner for Justice, Didier Reynders, of plans for EU legislation on mandatory corporate environmental and human rights due diligence is very welcome and Swedwatch looks forward to contributing to the process...

It should:

- Ensure that effective due diligence covering all material issues is undertaken by companies and does not become a box-ticking exercise;

- Cover all sectors of the economy and consider both upstream and downstream value chains;

- Ensure that due diligence is conducted with a gender sensitive perspective;

- Ensure access to remedy for rights holders affected by corporate malpractice;

- Establish consequences for companies not complying with the regulation.

- Be aligned and integrated with other regulatory initiatives, including the EU’s sustainable finance strategy, the review of the non-financial reporting directive and the 2030 Climate Target Plan.

In addition, it is crucial that the requirements set forth by the regulation should not become a mere reporting exercise but actually establish a clear legally binding obligation for companies and buyers/procurers to understand, identify, assess, address and mitigate human rights and environmental harm in their value chains...

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7 May 2020

Proposal for an EU wide mandatory human rights due diligence law

Author: Norton Rose Fulbright

On April 29, 2020, the European Commissioner for Justice, Didier Reynders, announced that the European Union plans to develop a legislative proposal by 2021 requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains. He further indicated that the draft law, once developed, is likely to be cross-sectoral and provide for sanctions in the event of non-compliance.

This announcement [...] comes in the same month as a call by 101 institutional investors [...] for governments to introduce mandatory human rights due diligence laws, and follows the publication of a wide-reaching study commissioned by the EC examining due diligence requirements through the supply chain...

[T]he study ultimately concludes that the introduction of mandatory due diligence requirements would yield the greatest positive impact... A key emphasis [...] was that any new law ought to be cross-sectoral and applicable to all businesses... Based on the Commissioner for Justice’s comments, it would appear the EC is inclined to follow these findings...

Crucially, the “mandatory due diligence requirement” option considered by the study would involve a legal mechanism which imposes a “legal standard of care”, meaning due diligence carried out by a business would need to be objectively sufficient in order to discharge its duty...

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6 May 2020

2021 law will make human rights due diligence mandatory for EU companies

Author: Stéphane Brabant, Daniel Hudson, Antony Crockett and Elsa Savourey - Herbert Smith Freehills LLP

European Commissioner for Justice Didier Reynders has announced that the European Commission will introduce legislation in 2021 to make human rights due diligence mandatory for EU companies.

Commissioner Reynders also indicated that the new law would include provisions for corporate liability and that the EU would also seek to ensure access to remedy for victims of abuses...

In 2017, France became the first country to pass a law making human rights due diligence mandatory for large companies and there have since been calls for similar law reforms elsewhere, including in Germany, Kenya, Norway, Switzerland, Thailand, the UK and the US.

Human rights due diligence has also been recommended in guidance from governments on how businesses can comply with human rights reporting requirements, such as those imposed by modern slavery legislation in the UK and Australia...

The legislation proposed in the EU may go a step further by imposing a legal duty to carry out human rights due diligence and imposing sanctions for breach of this duty. Commissioner Reynders indicated that the Commission will also consider the need to include provisions allowing victims of corporate abuse to obtain remedies. It is also possible that the EU will extend the due diligence obligation to cover environmental impacts...

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4 May 2020

European Commission Promises to Champion Corporate Accountability

Author: Aruna Kashyap & Juliane Kippenberg, Human Rights Watch

On April 28, European Commissioner for Justice, Didier Reynders, pledged support for binding rules requiring companies to conduct human rights due diligence in their global supply chains, which could help protect millions of workers around the world.

The EU needs “real and mandatory regulations” that govern “human rights, social issues, and environmental issues,” Reynders said... He outlined a vision for “sustainable corporate governance” and explained that authorities at both EU and national government levels could oversee implementation...

Human Rights Watch has exposed environmental and human rights harms in global supply chains in the garmentconstructionagriculture, and mining sectors...

The Covid-19 crisis has sharpened attention to such problems, and the calamitous impact of that business model is being felt most by poor women workers who are part of the supply chains of these brands.

As the commission prepares to kick-off public consultations following Reynders’ pledge, it should develop its questionnaires for the process with inputs from key stakeholders, including human rights and environmental groups, trade unions, and grassroots organizations... Setting a strong agenda that includes sanctions for companies and enforcement mechanisms, coupled with effective public consultations, will form the most solid foundation for the proposed EU regulations...

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30 April 2020

Commission announcement of due diligence legislation

Author: Heidi Hautala

Yesterday, 29th of April 2020, Justice Commissioner Didier Reynders announced, in a webinar hosted by Greens/EFA MEP Heidi Hautala, that the Commission will introduce a legislative initiative next year on mandatory due diligence for companies.

Heidi Hautala MEP, Greens/EFA Coordinator in the International Trade Committee, and the chair of the European Parliament’s Responsible Business Conduct Working Group comments:

“I am delighted at the commitment Commissioner Reynders showed towards protection of human rights and environment through EU-wide and mandatory due diligence legislation with an enforcement mechanism, applicable across all sectors. I welcome the Commissioner’s view that sustainable corporate governance and due diligence are an essential part of the EU’s recovery package. We should not rebuild the old economy, but a new one that is greener, more sustainable and more resilient.”

“The long awaited commitment from the Commissioner opens up an opportunity for all to start defining how such ground-breaking legislation should look like. The already established cooperation between MEPs, civil society and responsible businesses can now enter into a new exciting stage.” ...

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