Other authors: Kirsty Morris
The House of Commons’ Joint Committee on Human Rights (the “Committee“) has launched a new inquiry to examine the UK’s current framework in relation to forced labour in international supply chains1. The Committee is seeking to establish if the current framework is effective in managing the risk
On 14 December 2023, following several rounds of inter-institutional negotiations, the European Council of the European Union (Council) and the European Parliament (Parliament) announced that a political agreement had been reached on a Directive on Corporate Sustainability Due Diligence (CS3D). The European Commission (Commission) had initially published its proposal for CS3D on 23 February 2022, with the Council and the Parliament issuing their own positions on the text on 30 November 2022 and 1 June 2023, respectively (see our previous blogs, here, here and here).
Inspired by the 2017 French law on Corporate Duty of Vigilance and the 2021 German Supply Chain Law (see our previous blog post), and in response to growing stakeholder expectations and demands in the EU and globally, CS3D sets out EU standards for human rights and environmental due diligence (HREDD), requiring in-scope companies to mitigate their negative impact on human rights and the environment with respect to their own operations, those of their subsidiaries and those carried out by their business partners. In so doing, CS3D seeks to provide legal certainty and a level playing field as regards corporate supply chain obligations.Continue Reading Human Rights and the Environment – EU Institutions Reach Political Agreement On Corporate Sustainability Due Diligence Directive
On 28 November 2023, Baroness Young of Hornsey introduced the Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (the “Bill”) to the House of Lords. If passed, the Bill would introduce mandatory human rights and environmental due diligence (“HREDD”) into UK law.
The description of “reasonable” HREDD set out in the Bill is consistent with the standards set out in the UN Guiding Principles and existing and draft legislation in other jurisdictions (including the EU Corporate Sustainability Due Diligence Directive, “CS3D”, as outlined in our previous blog here). Companies with international footprints, including through their direct operations and supply chains, should already have in place a plan to implement enterprise HREDD processes that meet existing soft law standards and emerging hard law HREDD requirements.
While it is unclear whether the Bill would be supported by the UK Government, companies should already be taking steps to anticipate and prepare for HREDD. The direction of travel is undoubtedly trending towards HREDD legislation and stakeholder expectations around how companies should respond continue to increase. In particular, several jurisdictions have already adopted laws that require companies to identify, address, prevent, mitigate and remedy harms in their operations and supply chains (e.g. France, Germany, Norway, Switzerland, the Netherlands) in advance of CS3D which will directly apply to many large non-EU based companies given its broad extraterritorial application, while others are considering such laws (e.g. CS3D) (e.g., see our previous blogs here and here).Continue Reading Business and Human Rights – could the UK adopt mandatory human rights due diligence?
Companies are increasingly recognising that climate risk poses “strategic and operational risk” that could severely impact business operations. On 3 August 2023, United Nations Global Compact released Just Transition in Supply Chains: A Business Brief (the “Brief”). At the heart of the Brief is a call for businesses to embed the concept of ‘just transition’ into supply chain risk management, taking into account both the environmental and social impacts of their supply chains. There is real concern that as companies increase their climate mitigation and adaptation activities, such actions may have unintended consequences that negatively affect workers, small businesses and local communities that drive global supply chains. On the other hand, integrating climate and social risks into a business’ core business and risk management could be “mutually reinforcing” and could “deliver valuable co-benefits”.Continue Reading UN Global Compact Publishes Business Brief on Just Transition in Supply Chains
On 8 June 2023, during their Ministerial Council Meeting in Paris, the Organisation for Economic Co-operation and Development (“OECD”) launched an updated version of its Guidelines for Multinational Enterprises (the “Guidelines”). This is the first update to the Guidelines since 2011 and the changes represent substantial and far reaching new expectations for multinationals, particularly in relation to areas of their operations or business which may have human rights or environmental implications. This update sets out a brief overview of the OECD Guidelines and some of the key updates since the 2011 Guidelines.Continue Reading A new era for human rights and environmental due diligence: the OECD launches updated Guidelines for Multinational Enterprises
On 31 May 2023, the European Parliament and the Council of the European Union adopted Regulation (EU) 2023/1115 regarding the marketing and export of certain commodities and products associated with deforestation and forest degradation from the European Union. In this Legal Update, we delve into the regulation and highlight what operators and traders should know
On 1 June 2023, the European Parliament (the “EP“) plenary session adopted its proposed amendments to the draft EU Corporate Sustainability Due Diligence Directive (“CSDDD“).
The adopted text largely mirrors the version voted on by the EP’s Legal Affairs Committee in April 2023 (which we discussed in our earlier blog post), in that it confirms that:
The adopted text also confirms that non-compliant companies may be liable for damages and could be sanctioned by the national supervisory authorities of EU member states. Sanctions include taking a company’s goods off the market and/or the imposition of fines of at least 5% of a company’s net global turnover. Non-EU companies that fail to comply may also be banned from public procurement in the EU.Continue Reading Human Rights and the Environment – European Parliament adopts amendments to draft Corporate Sustainability Due Diligence Directive
Companies must recognise that they are subject to increased expectations in terms of effective identification and management of social issues. A failure to do so – and the resulting inequality – is increasingly seen as representing a systemic risk to the resilience of business operations and value chains. Expectations are reinforced by the wave of new due diligence regulations and reporting standards focussed on addressing both the ‘E’ and ‘S’ in ESG (see, for example, our earlier blog posts on the EU’s Corporate Sustainability Reporting Directive here, as well as on the UK Financial Conduct Authority’s Greenwashing rules here).
CFOs have a critical role in communicating how companies are addressing wider social issues linked to their business operations and ensuring companies’ compliance with related regulations and reporting standards. To help CFOs execute this role effectively, the World Business Council for Sustainable Development (the “WBCSD“) and Shift have released a primer for CFOs for advancing the ‘S’ in ESG (the “Report“). The Report aims to provide a starting point for CFOs working to address the demands and challenges associated with the ‘S’ in ESG, covering both an overview of the what, the who and the how of corporate social performance and key recommendations for improving the measurement of that performance.Continue Reading Business and Human Rights – a “primer” for CFOs for advancing the ‘S’ in ESG
On 28 February 2023, the Judicial Court of Paris (the “Court”) issued an interim order (the “Order”) in the context of a judicial dispute concerning compliance with the French Law n°2017-399 of 27 March on the Duty of Vigilance (the “French Vigilance Law”). This decision is the result of a lengthy judicial process that started back in 2019 when the defendant was summoned by several NGOs before the Court for an alleged lack of compliance with its obligation of vigilance.Continue Reading Business and Human Rights: first French case-law on the Duty of Vigilance – judges adopt a cautious approach to avoid judicial interference in corporate management