amfori has published an open letter to reiterate our full support for action at EU level on human rights and environmental due diligence. The letter outlines the key features we envision for the future EU approach.
The letter comes after the European Parliament (EP) adopted its recommendations to the European Commission (EC), and ahead of the planned release by the EC of its legislative proposal in June this year.
Background & latest developments
On 10 March, the EP adopted its report on corporate due diligence and corporate accountability.
The report requests that the EC swiftly present a legislative proposal on mandatory due diligence. The report further outlines the EP’s expectations to that effect.
It is important to clarify that the EP report is not legally binding: it should be regarded as a set of recommendations to the EC. While the latter has no formal obligation to take these recommendations into account, it is clear the report is likely to have an impact on the EC’s work.
Table 1: EU Milestones re Human Rights and Environmental Due Diligence Legislation
What does the EP report say in broad terms?
According to the EP report, the law would apply to large companies and publicly-listed and high-risks SMEs, both those established in the EU and those operating in the internal market.
What would those companies in scope have to do?
Taking international frameworks as a blueprint, the companies in scope (“companies”) would be required to conduct due diligence on human rights, the environment and good governance, all along the value chain, in a risk-based manner and informed by a prioritisation approach.
As part of their due diligence obligations, companies would have to draw up a due diligence strategy which would list the adverse impacts they may cause/contribute to / be directly linked to. They would also have to map their value chain, adopt and communicate the policies put in place and prioritise action.
The due diligence strategy would have to be published on their website, reviewed at least on a yearly basis, made available on a central register based on a standardised format and communicated to trade unions, workers representatives and business relationships.
Relevant stakeholders should be consulted at all stages of the due diligence process, including when determining the company’s due diligence strategy and evaluating its effectiveness.
Grievance mechanisms should be put in place both as an early detection mechanism as well as to provide for remedies.
What kind of enforcement and monitoring system would be envisaged?
National authorities would be tasked with carrying out investigations and would be in a position to impose sanctions including proportionate fines.
Liability regimes would be put in place at national level so that companies could be held liable and provide remediation for harm arising from adverse impacts on human rights, environment and good governance that they caused or contributed to, unless a company can prove it acted with due care.
The EC is currently assessing the input received via a public consultation that closed on 8 February 2021 and to which also amfori responded.
The EC is also working on the impact assessment that will accompany the future proposal. As such, the release of the legislative proposal on human rights and environmental due diligence is expected in June 2021. The legislative machine will be set in motion at that point in time.
amfori published a position paper on human rights due diligence legislation in February 2020 and has ever since engaged in policy discussions at EU level. The most recent example is amfori’s participation in the EP RBC event of 15 March 2021 where also European Commissioner for Justice Reynders was in attendance.
amfori has been facilitating a series of roundtables between businesses and CSOs to seek mutual understanding on matters related to HRDD. amfori has also engaged locally, via the organisation of local stakeholders network events discussing HRDD and UNGPs.
If you wish to know more about amfori Advocacy and our work on HRDD, please feel free to contact Valentina Bolognesi at email@example.com.