On December 1, 2020 the Council of the EU adopted Conclusions calling on the Commission to launch an Action Plan by 2021 focusing on shaping global supply chains sustainably, promoting human rights, social and environmental due diligence standards and transparency. In April 2020, the Commission already announced its intention to develop a legislative proposal and published a study on due diligence requirements through the supply chain (see our previous client alert).
The Action Plan should include a call for a proposal from the Commission for an EU legal framework on sustainable corporate governance including cross-sector corporate due diligence obligations along global supply chains. An EU framework is likely to foresee binding due diligence obligations and may include a definition of the risk management processes companies will be required to follow to identify, prevent, mitigate and account for its adverse human and labor rights and environmental impacts. Companies will have to ensure that human rights are respected along their entire supply chain and will have to assume responsibility for more than just their direct contractual partners. Those affected by violations of companies’ human rights due diligence obligations will be able to enforce their rights in the courts of EU Member States. The German Council Presidency recently suggested that EU-wide legislation could also improve the quality of voluntary standards and certification on fair wages and universal access to social protection.