What is Your Company’s Position on Due Diligence?
Two out of three business in the EU are not undertaking a due diligence effort which considers all human rights and environmental impacts. This is the conclusion of the report recently published by the European’s Commission Directorate-General for Justice and Consumers. On 10 March, CSR Europe will publish for its members an Issue-Insight, with an in-depth analysis of the report. How can companies have a real impact on the ground? By collaborating with all the relevant stakeholders to improve the supply-chain and secure sustainable sourcing. Discover our programme to support companies in moving “Beyond Due Diligence”.
Only one in three businesses in the EU are currently undertaking due diligence which takes into account all human rights and environmental impacts. Another one-third undertakes due diligence only in certain areas. This is the conclusion of the report recently published by the European Commission’s Directorate-General for Justice and Consumers. The “Study on due diligence requirements through the supply chain” focuses on due diligence requirements to identify, prevent, mitigate and account for negative corporate impacts. Companies interested in sharing their position on due diligence can send their comments to DG Justice and Consumers.
How should due diligence be organised then to have a real impact? In our experience with the leading automotive initiative Drive Sustainability, we believe the answer lies in the collaborative action between companies and stakeholders. Only by collaborating, companies will see improvements in the supply chain and secure sustainable sourcing of materials. How? There are many different possible courses of actions. In our experience, impactful results are achieved when companies set common training in specific countries as well as for specific supply sectors and engage in on-the-ground projects.
According to the report, contractual clauses, cause of conducts and audits are the most used due diligence actions. Business and industry organisations alike are pushed to adopt due diligence practices to manage:
Reputational risks
Higher standards requested by investors
Higher standards requested by consumers
The majority of stakeholders interviewed agreed that there is already enough voluntary guidance in existence and businesses are recognising the value of enforceable EU rules. The introduction of a general standard at EU level was positively seen by almost all interviewees, except for industry organisations. The overall preference? Cross-sectoral regulation that takes into account specificities of the sector and size of the company.
How can mandatory due diligence, advocated in the report, lead to real improvements?
A regulatory approach to due diligence at European level should be embedded in a more profound smart mix of policies that make sustainable value chains possible everywhere: in trade agreements, public procurement, and in the link between development work and supply chains.
CSR Europe is fully engaged in this policy dialogue with the von der Leyen’s Commission and for many years we have been working with leading companies on supply chain, spearheading innovative responses in many different sectors. In 2020, CSR Europe members will have the opportunity to engage with their peers and share best practices on how to move “Beyond Due Diligence”. Join us on 23 March, at the next webinar on "Due Diligence Regulations and Impact" with Stefan Crets, CSR Europe Executive Director.
For more information:
CSR Europe’s Beyond Due Diligence Programme