When it comes to corporate due diligence services, CRI® Group’s Corporate Due Diligence and Corporate Accountability solution help your business operating in the EU to comply with all EU mandates. The New legislation presented by EU Parliament requires companies operating in the EU to “identify, address and remedy their impact on human rights and the environment throughout their global value chains”. Organisations are liable for the conduct of their partners. Lack of due diligence will get organisations into trouble. Ending an era of voluntary policing, a new EU directive places liability on companies unable to assess and mitigate unethical third-party behaviour.
Global economies have significantly benefited from an increase in cross-border and international business partnerships, which has led to a substantial expansion of the global value chain. Subsequently, more and more companies are being exposed to potential liability by unscrupulous third-party providers in their supply chain pipeline with little respect for business ethics, human rights, or the environment.
There is a growing concern worldwide of the many supply chain businesses linked to severe abuses, including exploitative working conditions, modern slavery and child labour, toxic pollution, rampant destruction of rainforests, and a general disregard for corporate governance. For decades, companies have voluntarily monitored supply chain partners for bad behaviour, but this self-policing has been limited.
But now, the European Union Parliament has presented mandates for EU businesses – under penalties of law – to carry out corporate due diligence services to identify, prevent, mitigate and account for actual or potential human rights violations and negative environmental impacts in their operations and supply chain.
That law requires companies their best efforts to identify and address adverse impacts on human rights, the environment and governance, and this in their entire value chain, inside and outside the Union.
This directive would apply to all EU businesses and non-EU organisations doing business in the EU (such as selling goods or services). Regardless of where the company is headquartered, if it does business in the EU and is of any substantial size, the directive would likely apply.
The legislation would require companies operating in the EU to conduct effective due diligence to identify, address and remedy their impact on
At CRI®, we believe that to transform supply chains in a meaningful way, due diligence should be exercised by all companies with risks in their supply chain. Contact us today to learn more about how we can help you with our bespoke corporate due diligence services.
If a company fails to conduct due diligence on a third-party partner that engages in slave labour, pollutes the environment, manipulates the price, or violates jurisdictional regulations, that company is essentially complicit in the partnering company’s illegal behaviour. It may be held liable in a court of law.
Aside from legal and monetary penalties, the company further risks a tarnished reputation in the market and a devaluation of its brand.
Companies (big or small) that want to access the EU internal market, including those established outside the EU, would have to prove that they comply with environmental and human rights due diligence obligations.
Parliament calls for additional measures, including a ban on importing products linked to severe human rights violations such as forced or child labour. EU trade agreements should include these aims in their trade and sustainable development chapters.
In order to guarantee adequate reparations for victims, companies should be held liable for their actions and be fined for causing harm or contributing to it unless they can prove that they have acted in line with due diligence obligations and taken measures to prevent such harm. The rights of victims or stakeholders in third countries – especially vulnerable – would be better protected, as they could take companies to court under EU law.
It’s crucial for businesses utilising global supply chain partners to conduct due diligence and assess the potential risks that a third party may pose to your organisation, particularly when addressing risks associated with environmental damage and human rights violations.
CRI® developed a highly specialised assessment solution for Corporate Due Diligence and Third-Party Risk Management to assist organisations in accurately identifying, preventing, mitigating, and addressing actual and potential adverse impacts of affiliating with global partners complies with all EU mandates.
From enhanced due diligence to identify non-compliance of the regulatory framework and negative environmental allegations to investigating company (or stakeholder) human rights violations related to labour laws, child labour or human trafficking, CRI® experts help determine the legal compliance, financial viability, and integrity levels of outside partners and suppliers affiliated with your company’s value chain.
Explore our Third-Party Risk Management and Due Diligence solutions to find out more. CRI® Corporate Due Diligence and Accountability solution helps your business operating in the EU to comply with all EU mandates.
Recent studies have demonstrated a positive correlation between the extent to which companies implement environmental, social and good governance policies, and their overall economic performance, all while contributing to a more stable global marketplace. Such responsible business conduct:
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