Corporate Due Diligence: Difficulties Implementing Supply Chain Accountability

A blog post by Vito Arango, Junior Associate.

On March 10, 2021, the Parliament of the European Union adopted a resolution on Corporate Due Diligence and Corporate Accountability.[1] The resolution calls for a binding requirement on businesses to fulfill their international human rights obligations and to remedy potential and actual adverse impacts on human rights, the environment and good governance due to practices in their supply chain.[2] Moreover, member states of the European Union would be required to create laws ensuring that these businesses perform effective due diligence monitoring of supply chain abuses.[3] Importantly, the resolution seeks to follow in the framework of the United Nations Guiding Principles on Business and Human Rights (UNGPs), working to implement due diligence standards and practical applications of responsible human rights law.[4]

However the resolution, faces criticism from the Office of the UN High Commissioner for Human Rights (OHCHR), which noted that the due diligence strategy is somehow separate from the identification and assessment process which under UNGPs is needed in order to determine whether a business may be causing, contributing to, or directly linked to actual or potential adverse impacts.[5] Of particular concern to the OHCHR is that the resolution’s strategy would not sufficiently determine whether a company is involved with adversely impacting human rights on its supply chain.[6] Additionally, the resolution did not adequately involve meaningful discussions with potentially affected groups and other relevant stakeholders within the definitions stated in the UNGPs.[7]

Although the European Parliament’s resolution is a positive development, as it requires businesses to perform due diligence in their supply chain, it still warrants criticism especially from the standards that it purports to uphold. As this statute is still in its early development, any vagaries or contradictions may cause exploitation by the same industries that law was seeking to regulate.

[1] European Parliament Resolution of 10 March 2021 with Recommendations to the Commission on Corporate Due Diligence and Corporate Accountability, 2021 O.J. (C 474) 11.

[2] Id. at 14.

[3] Id. at 16.

[4] Id. at 22.

[5] Office of the U.N. High Commissioner for Human Rights, EU Mandatory Human Rights Due Diligence Directive: Recommendations to the European Commission, 3 (July 2, 2021), https://www.ohchr.org/Documents/Issues/Business/ohchr-recommendations-to-ec-on-mhrdd.pdf.

[6] Id.

[7] Id. at 3–4.

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