Earlier this month, the European Parliament and the Council of the EU agreed to the EU Commission’s Omnibus I proposal — also known as the “Stop-the-Clock” proposal — on delaying the implementation of the EU Corporate Sustainability Due Diligence (CSDDD) and the EU Corporate Reporting Directive (CSRD) until the outcome of the broader omnibus package is finalized. These changes include revisions to the scope of companies subject to the regulations and to the extent of their due diligence obligations.
CSDDD directly mandates due diligence. The CSRD is a reporting regulation and while it does not explicitly require companies to undertake due diligence, meaningful reporting under the CSRD can only happen if a robust due diligence framework is in place.
But what is overlooked in the debate surrounding the omnibus proposal is that human rights due diligence (HRDD) is not confined to the two EU corporate sustainability regulations under discussion. Narrowing the scope of these regulations will not exempt most (currently in-scope) companies from the responsibility (and necessity) to conduct due diligence.
Human rights due diligence extends well beyond the CSDDD and CSRD. In fact, conducting human rights due diligence is a legal requirement under various existing regulations —some focused on specific commodities or risks, others taking a more comprehensive approach.
Here is list of EU regulations that necessitate human rights due diligence:
- The EU Conflict Minerals Regulation obliges certain EU-based importers of 3TG to set up a due diligence system for their mineral supply chain to ensure these conflict minerals are responsibly and conflict-free sourced.
- Under the EU Forced Labor Regulation (EUFLR), before a formal investigation into forced labor is initiated, companies may be asked to demonstrate the due diligence they have conducted, i.e., the actions taken to identify, prevent, mitigate, bring to an end or remediate forced labor risks in relation to the products in question (Art. 17 of the EUFLR).
- The EU Deforestation Regulation requires companies to undertake due diligence before placing products or making them available on the EU market or exporting them. This includes risk assessment and mitigation measures. In addition, the law requires companies to ensure that the product has been produced in accordance with the relevant national law in terms of, among others, labor rights, human rights or land use rights.
- The EU Battery Regulation imposes social and environmental due diligence obligations regarding the sourcing of raw materials needed for battery production.
National laws that necessitate human rights due diligence:
- The German Supply Chain Act (LkSG) requires in-scope companies to exercise human rights and environmental due diligence in their supply chains to prevent, minimize human rights or environmental-related risks or end the violations (Section 3 of the LkSG). [Read our analysis of the new German coalition government’s plans to replace the LkSG here].
- The French Duty of Vigilance Law requires in-scope companies to set up a due diligence plan (plan de vigilance) and effectively implement it (mise en oeuvre effective) to identify risks and prevent serious violations of human rights and fundamental freedoms, the health and safety of people and the environment.
- The Norwegian Transparency Act obliges in-scope companies to carry out due diligence in company’s operations, products or services via the supply chain or business partners to identify and assess adverse impacts on fundamental human rights and decent working conditions (Section 4 of the Act).
- Section 1502 of the US Dodd-Frank Act requires in-scope companies to disclose whether they use conflict minerals originated in the Democratic Republic of the Congo or neighboring countries. If so, companies must provide a “conflict minerals report” describing due diligence measures taken.
- The US Uyghur Forced Prevention Labor Act (UFLPA) requires companies, in case their good are detained, excluded or seized at the US border, to demonstrate the source of the good and to ascertain that no forced labor is involved in its production and each of its components (Section 3 of the Act).
- While the UK Modern Slavery Act and the Australian Modern Slavery Act do not mandate due diligence per se, they require companies to disclose the steps taken to address modern slavery and human trafficking risks along their supply chains.
- Similarly, the Canadian Fighting against Forced Labor and Child Labor in Supply Chains Act requires reporting on efforts companies make to prevent and reduce forced labor and child labor risks in their supply chains, though not due diligence itself.
- Amendments to the Swiss Code of Obligations and the Swiss Criminal Code as part of the Swiss counterproposal to the Responsible Business Initiative require companies to set up a comprehensive due diligence system if they (1) import or process above certain quantities of 3TG to assess whether they come from conflict or high-risk areas or (2) offer products and services with a “reasonable suspicion” of having been produced or provided using child labor.
In short, companies subject to any of these laws—or operating within the value chain of those that are—should already be identifying and assessing their human rights risks and impacts.
In other words, they should already be conducting human rights due diligence.
Various regulations across multiple jurisdictions require businesses to assess and address their risks and impacts on people and the planet.
And the CSDDD and CSRD are only one piece of this broader legal landscape.
So even if your organization’s commitment to sustainability, particularly human rights, has been primarily compliance-driven so far, the current debate about delaying or revising corporate sustainability laws should not dampen the momentum for responsible business conduct.
If you are noticing a shift in focus away from human rights, remind leadership and internal stakeholders that due diligence is already a legal obligation under many laws – and that human rights due diligence is here to stay.
Read the eight strategies we’ve compiled to help corporate sustainability professionals keep the human rights conversation alive.
Looking for an ally to discuss strategies for maintaining momentum? Drop me a message at cecilia@peopleatcore.com.
Cecilia for the CORE team
