Commission study shows the need for EU-level legislation on due diligence throughout the supply chain on human rights and environmental impacts
Today, the European Commission is publishing the results of a study on due diligence requirements through the supply chain. This study shows that only one in three businesses in the EU are currently undertaking due diligence on human rights and environmental impacts. Due diligence, in this context, means that for example a company checks their suppliers and operations to be sure it “does no harm”. It could imply that a company needs to check if their suppliers are not using child labour, or that they do not pour waste products into the rivers. 70% of the 334 business survey respondents agreed that EU-level regulation on a general due diligence requirement for human rights and environmental impacts could provide benefits for business. Didier Reynders, Commissioner for Justice, said “Companies told us they believe that EU rules would here provide legal certainty and a harmonised standard for businesses’ duty to respect people and the planet. As working towards climate neutrality is among the top priorities of this Commission, I will make sure the results of this important study are taken into account for future work.” Today’s study was launched in December 2018, as part of the Commission’s Action Plan on Financing Sustainable Growth. It examines options for regulating due diligence in companies’ own operations and through their supply chains for adverse human rights and environmental impacts, including relating to climate change. This study also feeds into the objectives of the European Green Deal, which highlights that sustainability should be further embedded into the corporate governance rules across the EU, as many companies focus too much on short-term financial performance compared to their long-term development and sustainability aspects. More information on the study can be found here.