BEERG Newsletter - EU: What scope for the due diligence Directive?

Last week, the BEERG meeting in Brussels was told that some 6,000 amendments have been tabled to the proposed Directive on Corporate Due Diligence, underscoring just how complicated a piece of legislation it is. When adopted, it will require companies to take measures to anticipate and eliminate risks to human rights, including labour and environmental rights, throughout their supply chains. 

Some want to extend the obligation to “value chains” which would mean that businesses would be responsible for what happens with their products or services after they have been sold. For example, a tech company could be held liable if an authoritarian regime misused one of its products, such as facial recognition technology.

The Directive will make its way through the legislative process during the coming year, but given the issues involved, there is no guarantee that agreement can be reached between the Parliament and the Council in such a short timeframe.

For the trade unions, due diligence is all about union recognition and collective bargaining. For example, unions believe they will be able to complain about the refusal of an EU-headquartered multinational to recognise unions in their plants in the US and, if the complaint is upheld, the company could be subject to significant fines. 

Figures of 5% of global turnover are being mentioned. One interesting question that was raised in informal discussions over dinner was whether a US company that would fall within the scope of the new Directive because of the size of its footprint in Europe, could also be sued in a similar way over the way it conducts labour relations in the US, or elsewhere.

For an insight into the way unions are thinking and strategizing around due diligence, see this from Uni Global: Due Diligence Toolkit (Uniglobal union)