The European Parliament has adopted a draft directive on so-called due diligence, that is, the liability of operators for possible violations of rules protecting human rights, workers and the environment throughout their supply chains.
Foreword. The EU’s duties regarding sustainable development
The Treaty on European Union (TEU), in Articles 3 and 21, commits it to uphold and promote-in its relations with the rest of the world-its values and principles. First and foremost,the rule of law (the rule of law), respect for and protection of human rights, and contribution to sustainable development of the Earth, solidarity, and free and fair trade. As well as to the strict observance and development of international law.
The European Union then has the specific task-systematically disregarded, as we have seen-of ‘promoting the sustainable development of developing countries economically, socially and environmentally, with the primary aim of eradicating poverty.’
The TFEU (Treaty on the Functioning of the European Union) in turn requires the EU to take development cooperation objectives into account when implementing all policies that may affect developing countries (TFEU, Article 208.1).
Due diligence, the European Parliament’s initiative
The Strasbourg Assembly’s legislative initiative on due diligence was adopted by a large majority (504 votes in favor, 79 against and 112 abstentions) on 10.3.21. (1) With the goal of ensuring effective sustainability in every value chain-which is explicitly referred to-through mandatory and harmonized standards to be applied to all economic sectors.
Indeed, assigning precise responsibilities to economic operators established in the EU appears to be the necessary condition so that:
– the Union can truly contribute to the Sustainable Development Goals (SDGs) in UN Agenda 2030,
– corporate governance can take on a strategic role rather than one of mere appearance, as hitherto observed in the crumbling CSR(Corporate Social Responsibility) paradigm.
Due diligence, concept and responsibility
The due diligence (literally, ‘due diligence‘) is traditionally understood in the terms of ‘corporate human rights and environmental due diligence.’ It goes further, referring in more general terms to ‘corporate due diligence and responsibility‘.
All companies operating in the EU will therefore have a legal duty and responsibility to:
– Identify, assess, prevent, and disclose all adverse impacts on human and workers’ rights, children, and the environment that arise or may arise from the
– productive activities and business operations wherever carried out by the enterprises themselves, as well as by
– any other transaction that has taken place throughout the value chain, when it also involves their subsidiaries, subcontractors, suppliers and other business interlocutors.
Due diligence, basic rights to be guaranteed
The Strasbourg Assembly recalls both the fundamental rights covered by existing conventions and the goals set forth in additional agreements and strategies. We therefore refer first and foremost to:
– Charter of Fundamental Rights of the European Union (ECHR),
–International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work (1998) and its sequels
– 2017 ILO Tripartite Declaration of Principles on Multinational Enterprises and Social Policy,
– initiative on children’s rights and business principles developed by UNICEF, Global Compact (UN, ILO), Save the Children.
International criteria and guidelines
Ensuring compliance with the above fundamental rights and reporting on them must also take into account European rules already applied in some areas (e.g., the timber, conflict minerals), as well as criteria-general and sector-specific-and internationally defined guidelines:
– general criteria. Ex. ‘Protect, Respect and Remedy‘ Framework for Business and Human Rights (UN, 2008), United Nations Guiding Principles on Business and Human Rights (2011), ‘Gender Dimensions of the Guiding Principles on Business and Human Rights‘ (UN, 2011),
– specific criteria (agribusiness and finance). OECD-FAO Guidance for Responsible Agricultural Supply Chains, (2) OECD Due Diligence Guidance for Responsible business conduct for institutional investors, (3)
– operational guidelines. OECD Guidelines for Multinational Enterprises, OECD Due Diligence Guidance for Responsible Business Conduct.
SDGs, climate agreement, sustainable finance
Businesses must also respond to international commitments made by the European Union on the various fronts of:
– Sustainable Development Goals (SDGs). Notes on the transformations for this purpose required of operators in the agribusiness chain are recalled, (4)
– Paris agreement on climate change. In turn linked to the UN Convention on Biodiversity, which is also not mentioned. (5)
Sustainable finance is then also evoked through reference to the special resolution 29.5.18 of the European Parliament itself. (6)
Due diligence and corporate accountability, application implications
The directive proposed by the European Parliament will be binding on all companies and must ensure that certain and dissuasive penalties are adopted in all member states, as well as fair compensation for victims of abuse. Just as is happening in France at Groupe Casino, for selling Brazilian meat ‘from deforestation’. (7)
The application implications of due diligence and corporate accountability thus have the potential to impart a decisive shift in corporate policies and procedures for selecting all suppliers, products and services wherever procured.
Precisely because the imprudence and negligence that characterize the ‘price drug’ will be able to result in six-figure contingent liabilities.
Dario Dongo
Notes
(1) European Parliament resolution of March 10, 2021 with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL). Italian text at https://www.europarl.europa.eu/doceo/document/TA-9-2021-0073_IT.html
(2) Dario Dongo. FAO, China in the lead. GIFT(Great Italian Food Trade). 6/27/19, https://www.greatitalianfoodtrade.it/progresso/fao-la-cina-al-comando
(3) NB: we note the conspicuous omission of the reference to:
– The Voluntary Guidelines on the Tenure of Land Fisheries and Forests (FAO, CFS, 9.3.12),
– Principles for Responsible Investment in Agriculture and Food Systems (FAO, CFS, 15.10.14)
(4) Dario Dongo. SDGs, the dutiful transformations for the food supply chain. GIFT(Great Italian Food Trade). 9/19/19, https://www.greatitalianfoodtrade.it/progresso/sdgs-le-trasformazioni-doverose-per-la-filiera-alimentare
(5) Dario Dongo. Biodiversity and climate change, the common thread. Égalité. 13.2.20, https://www.egalite.org/biodiversita-ed-emergenza-climatica-il-filo-comune/
(6) European Parliament. Resolution 29.5.18 on sustainable finance(2018/2007(INI). https://www.europarl.europa.eu/doceo/document/TA-8-2018-0215_IT.html
(7) Dario Dongo. Brazilian meat from deforestation, Groupe Casino sued in France. GIFT(Great Italian Food Trade). 7/18/21, https://www.greatitalianfoodtrade.it/progresso/carne-brasiliana-da-deforestazioni-groupe-casino-citata-in-giudizio-in-francia
A significant survey conducted during 2015 by The Economist found that most business leaders these days recognize that business is an important player from a human rights protection perspective and that what their companies do-or fail to do-can affect their assurance (cf. The Economist, The road from principles to practice: Today’s challenges for business in respecting human rights, 2015 available at www.universal-rights.org/wpcontent/uploads/2015/03/EIU-URG_-_Challenges_for_business_in_respecting_human_rights.pdf
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
