Mandatory Human Rights Due Diligence in the EU: What It Could Mean for Business

Mandatory Human Rights Due Diligence in the EU: What It Could Mean for Business

A Norwegian government ethics committee has recommended the adoption of mandatory human rights due diligence and disclosure obligations for multinationals doing business in Norway. The committee released a draft of the legislation, outlining suggested parameters. With that, Norway joins a growing number of European Union (EU) states that are either considering legislation, in the process of adopting legislation or have already adopted mandatory due diligence measures to advance human rights protections.

 

Building Momentum Across Europe

Between the French Duty of Vigilance Law, Dutch legislation on child labor due diligence, and proposed legislation in Germany, the UK, Denmark, Norway, Finland, Switzerland and Luxembourg, it is clear that mandatory human rights due diligence is gaining momentum in Europe. While there has been multi-sectoral support for such measures, some stakeholders are concerned about relying on a patchwork of national legislation.

Instead, some stakeholders believe that in addition to national legislation, an EU-wide regulation on mandatory human rights due diligence is required. They assert that a regional regulation will not only ensure cohesion, but also level the playing field for responsible businesses and provide legal certainty concerning their responsibilities. In Germany, 42 companies recently made a similar call for EU regulations, highlighting the importance of the issue to the business community.

On December 2, 2019, the Finnish EU Council Presidency also signaled a move toward human rights legislation. At a conference in Brussels, it put forward an Agenda for Action on Business and Human Rights that highlighted the need for EU-wide regulation on Business and Human Rights, and recommended “further EU-wide initiatives, including regulation on mandatory human rights due diligence.” 

While there is no immediate indication as to when such a regulation will become reality, commentators believe it is no longer a matter of “if” but “when” human rights due diligence will become a mandatory EU requirement. Based on similar pieces of legislation that are currently in effect, combating human trafficking, child labor, forced labor and slavery will be key pillars of an EU-wide approach to due diligence. 

 

Preparing for an EU-Wide Human Rights Regulation

For EU-based companies or those wishing to do business in the EU, these developments have significant implications. Companies must put measures in place to increase supply chain transparency. Given the complexity of global supply chains and their vulnerability to human rights violations, companies should assess their supply chains for these risks as part of their regular due diligence. Companies can get ahead by gathering, analyzing and monitoring data from their supply chains. They should use this data to identify risks and determine a plan for addressing risks to mitigate potential impact.  

All actors in the supply chain will benefit from a clear and consistent set of rules with explicit intent. However, companies that are not prepared may find themselves on the wrong side of enforcement actions and regulatory investigations.

 

How Assent Can Help 

Assent’s solution enables companies to manage human rights risks within their supply chains by automating the data collection and analysis needed to identify and address risks. Assent leverages industry-standard formats such as the Slavery and Trafficking Risk Template (STRT) to ensure comprehensive, valid submissions.  

To learn more about how your company can build a robust human rights due diligence program ahead of mandatory requirements, contact us at info@assentcompliance.com.

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