In February 2022, over 100 companies, investors, business associations and initiatives released a joint statement urging the EU to swiftly adopt a legislative proposal on mandatory human rights and environmental due diligence (mHREDD), within the Sustainable Corporate Governance initiative. Signatories to the statement including Aviva, Danone, Ericsson, IKEA, Hapag-Lloyd and VAUDE express concern about the setbacks to the twice-delayed proposal, which is now expected later this month.
The statement, signed by companies and investors from various industries and countries, including many SMEs, outlines five key principles to be included in the legislation to make it effective:
- Alignment of the legislation with the UNGPs to cover all businesses operating in the EU market, regardless of sector and size;
- Due diligence obligation that extends across the full value chain;
- Mandatory requirements which go beyond tick boxing, address irresponsible purchasing practices, and are embedded in appropriate governance structures including at board level;
- Effective and safe stakeholder engagement as an integral part of due diligence; and
- Credible accountability mechanisms, including strong civil liability provisions
Similar EU-facing statements endorsing due diligence legislation including civil liability have been released by a group of cocoa companies as well as 94 investors with over USD 6 trillion in assets under management, among others.
Business & Human Rights Resource Centre monitors national and regional developments towards mHREDD legislation. In 2021, mHREDD laws were passed in Germany and Norway, and similar laws are under consideration in the Netherlands and Finland. The EU’s Sustainable Corporate Governance initiative can play a significant role in creating a Europe-wide level playing field for mHREDD and corporate accountability and, crucially, drive better outcomes for people and the planet across global value chains.
