On April 29, 2020, the European Commission announced plans to develop a legislative proposal by 2021 that will require EU companies to conduct mandatory human rights and environmental due diligence on their operations and global supply chains. If passed, the new law would also include provisions for corporate liability with possible sanctions imposed for non-compliance.
The announcement follows the publication of a study conducted for the European Commission which focused on the due diligence requirements to identify, prevent, mitigate and account for abuses of human rights, including the rights of the child and fundamental freedoms, serious bodily injury or health risks, and environmental damage including with respect to climate. The announcement comes as part of wider efforts across the European Union to prevent human rights abuses and protect vulnerable workers.
What about the United Kingdom?
Given that the UK has left the European Union and the new human rights due diligence legislative proposals will be developed in 2021, after the agreed end of the transition period on December 31, 2020, it is likely that the new EU-wide legislation will not apply to UK-based companies (unless the UK government agrees otherwise). Nonetheless, UK companies could see a “failure to prevent” human rights offence adopted in English law, grounded in the UN Guiding Principles on Business and Human Rights framework.
For more on the Commission’s plans for a legislative proposal, click here to read the full Steptoe Client Alert.