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6 May 2020

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

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

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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...