EU Commissioner for Justice Didier Reynders sent a clear signal that new regulation of corporate behaviour is on the horizon. In a webinar organised by the European Parliament’s Responsible Business Conduct working group, he called for new EU legislation on human rights and environmental due diligence throughout supply chains.
Reynders said that corporate decision-making needs to foster longer time horizons to incentivise sustainable business models and increase corporate accountability for human and environmental harm. He placed particular attention on company directors’ responsibility for “duty of care”.
Calling for “responsible business conduct and sustainable supply chains (to) become the norm, a strategic orientation for businesses”, Reynders made reference to the newest Commission study on due diligence requirements through the supply chain, which presents four options. He clearly preferred the fourth: mandatory due diligence as a legal standard of care.
If new legislation is to level the playing field among companies, Fern suggests that additional legislation is passed for forest-risk commodities such as soya, beef and leather, palm oil and cocoa. To be placed on the EU market, companies must be able to show that their product is free of deforestation and human rights violations.
It is promising that DG Justice is pressing ahead with its work on corporate due diligence, in line with the Circular Economy Action Plan. It will also be necessary to coordinate closely with DG Environment to assess how this interlinks with DG Environment’s own regulatory initiative to tackle deforestation, as one of the options is a due diligence regulation.
Together these approaches can establish standards high enough for EU companies to ensure that the products they and their suppliers trade or process have not harmed Indigenous Peoples, local communities or workers, and have not caused deforestation.