Corporate due diligence legislation in the EU. Goodbye ‘should’, hello ‘must’?

Earlier this year, the final report of a study, prepared for the European Commission by a research group led by the British Institute of International and Comparative Law earlier this evaluated four regulatory options available at the EU level in terms of human rights due diligence:

option 1: no change;

option 2: new voluntary guidelines;

option 3: new reporting requirements; or

option 4: the introduction of mandatory due diligence requirements.

Option 4 was the preferred option and the study concluded that that any new law ought to be cross-sectoral and applicable to all businesses, regardless of their size. This now seems to be the view of the European Commissioner for Justice, Didier Reynders, who on 29 April 2020 announced that the EU plans to develop a legislative proposal by 2021 requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains. The draft law is likely to be cross-sectoral and to provide for sanctions in the event of non-compliance.

It remains to be seen whether the UK intends to enact any similar legislation.