The European Commission will propose new rules on mandatory human rights and environmental due diligence in EU companies’ global supply chain, the bloc’s justice commissioner has confirmed.
European Commissioner for Justice, Didier Reynders, announced on Wednesday (29 April) that he will next year introduce legislation on mandatory sustainable due diligence for companies as part of the Commission’s 2021 work plan and the European Green Deal.
Speaking during a European Parliament webinar, Reynders told EU lawmakers that DG Justice will launch a public consultation on the initiative in the coming weeks, before tabling the legislation in the first quarter of 2021.
The legislation, which the Commission will frame as part of its Green New Deal and its plans to achieve carbon neutrality, is set to identify, prevent, mitigate and account for human rights abuses and environmental damage linked to corporate operations, subsidiaries or value chains.
Although the details will be haggled over the remainder of 2020, Reynders promised that the new law will require companies to carry out checks on their supply chains and look at risks that their activities may be harming human rights.
By publicly reporting on these risks, and on what they have done to deal with them, companies can demonstrate to investors, consumers and local communities that they are committed to responsible and sustainable business.
Reynders gave assurances that the new law, modelled on the French ‘duty of vigilance’ law which requires companies to show a ‘duty of care’ in their operations, investments and supply chains, will offer access to remedy for victims and strong enforcement mechanisms.
Civil society campaigners and MEPs have been campaigning for mandatory due diligence laws for a number of years, but the EU executive has tended to prefer self-regulation and voluntary codes by firms rather than hard law.
However, a study published by the EU executive in February revealed that only one in three companies surveyed were currently undertaking due diligence measures and that around 70% of European businesses now support mandatory due diligence standards.
The costs to businesses of conducting human rights and environmental due diligence would not be over-burdensome, the study also found.
Almost half of all major EU companies have been the subject of documented accusations of human rights violations, but lawmakers now believe that companies’ attitudes have shifted.
The plan has the strong support of the German government, which will hold the next six-month EU presidency from July. “You have our support from Berlin,” a representative of the German Ministry of Labour and Social Affairs told Commissioner Reynders at the webinar.
Heidi Hautala, a spokesperson for the Green group on International Trade in the European Parliament, said that “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,” she added.
The coronavirus crisis has highlighted how reliant the EU is on global supply chains. As European companies have scrambled to quickly procure personal protective and other emergency medical equipment, there have been many reports that such goods have been made using slave labour.
“During this period of uncertainty and economic turbulence, such legislation would help to ensure robust and sustainable supply chains and help companies address their environmental, social and governance issues related to the Covid-19 crisis,” said Rachel Owens, head of EU Office for Global Witness.
“It would also ensure that such responses do not create further risks to people, planet and society.”
[Edited by Zoran Radosavljevic]