January 2021

[T]his briefing provides a practical overview of the proposed mHREDD law and the processes that will lead to eventual legislation and share key considerations for business - as well as other interested stakeholders. It also provides information about the current consultation launched bz the European Commission to inform the legislative proposal that it expects to publish this year. The consultation is open until midnight on 8 February 2021...

Key considerations include the following:

• ...[I]ncluding [SMEs] within the scope of the general mHREDD requirements may help reinforce the message that all businesses have a responsibility to operate with due diligence...
• ...Legal obligations need to be articulated with a sufficient level of clarity and specificity, given that there will be legal consequences and exposures for failures to comply...
• ...For a law to be effective, it needs to [...] impose obligations in a way that supports companies to prioritise their focus, efforts and resources...
• ...It is critical that mandatory due diligence requirements be designed in a way that encourages transparency and supports businesses to engage in dialogue with a view to addressing identified [...] risks in a way that achieves meaningful outcomes...
• ...Care will be needed to ensure that liability and sanctions provisions recognise and reinforce the responsibilities of all entities involved in a human rights harm...

[It] is important that [a mHREDD] law drives meaningful, rather than checkbox, due diligence...

The direction of travel towards mandatory due diligence is clear...

Businesses that have not yet started to implement human rights and environmental due diligence processes would be well-advised to do so...