Corporate Sustainability and Due Diligence – What Does the New European Directive Offer?
International Justice and Human Rights Researcher
Global Human Rights Defence
On the 23rd of February 2022, the European Commission adopted a proposal for a “Directive on Corporate Sustainability and Due Diligence”. This Draft Directive has been highly anticipated as it would render due diligence regarding human rights and the environment mandatory for companies’ day-to-day activities. Although the proposed Directive will only apply to some companies and sectors, its main objective is to require companies to
“identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers, and on the environment, for example pollution and biodiversity loss”.
If adopted, the Directive would be beneficial for companies as it would bring them legal certainty. The current due diligence obligations imposed on companies differ depending on the legislation that has been adopted at a national level. Hence, the introduction of a single due diligence obligation which applies to all companies conducting business within the EU sphere will avoid the fragmentation of the law and “level the playing field”. It is also believed that the Directive will provide more transparency for investors and consumers as well as promote the EU’s engagement towards a greener economy and the protection of human rights. Didier Reynders, Commissioner for Justice, stated that “with these rules, we want to stand up for human rights and lead the green transition. We can no longer turn a blind eye”.
The proposed Directive on Corporate Sustainability and Due Diligence is to be presented to the European Parliament and the European Council. If both European institutions approve of the Directive, then the Member States of the European Union will have two years to implement a national law which comprises the obligations found in the Directive.
Sources and further reading:
Business and Human Rights Resource Centre. (2022, February 23). The Growing Worldwide Movement to Legally Require Companies to Undertake Human Rights Due Diligence. Business and Human Rights Resource Centre. Retrieved February 25, 2022, from https://www.business-humanrights.org/en/big-issues/mandatory-due-diligence/
European Commission. (2022, February 23). Press Release - Just and Sustainable Economy: Commission Lays Down Rules for Companies to Respect Human Rights and Environment in Global Value Chains. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1145
Lise Smit and Claire Bright. (2022, February 23). The New European Directive on Corporate Sustainability Due Diligence. Business and Human Rights Resource Centre. Retrieved February 25, 2022, from https://www.business-humanrights.org/en/latest-news/briefing-the-new-european-directive-on-corporate-sustainability-due-diligence/