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.

 

THE CONTEXT

Did you know that “In 2017, nearly 25 million people were categorised as victims of forced labour” (International Labour Organisation, 2017 report)? 

Or that “From 2000-2012, nearly 25% of all tropical deforestation was due to illegal agro-conversion for export markets (2019 study)?” 

Global economies have benefited greatly 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 that have little respect for business ethics, human rights, or the environment.

There is a growing concern worldwide of the many supply chain businesses that are linked to serious 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 behavior, 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 due diligence to identify, prevent, mitigate and account for actual or potential human rights violations and negative environmental impacts in their operations and supply chain.

Read the directive

THE DIRECTIVE ON CORPORATE DUE DILIGENCE AND CORPORATE ACCOUNTABILITY 

 

The EU parliament has published this directive for organisations to “identify, assess, prevent, cease, mitigate, monitor, communicate, account for, address and remediate potential and/or actual adverse impacts on human rights, the environment and good governance in their value chain”.

Read the directive on Corporate Due Diligence and Corporate Accountability here.

This directive would apply to all EU businesses as well as to 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.

Read the directive on Corporate Due Diligence and Corporate Accountability here.

The legislation would require companies operating in the EU to conduct effective due diligence to identify, address and remedy their impact on human rights (including social, trade union, and labour rights), the environment (contributing to climate change or deforestation), and good governance (such as corruption and bribery) throughout their value chain. 

This is akin to saying that 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 behavior and 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.

Read the directive on Corporate Due Diligence and Corporate Accountability here.

THE SOLUTION

Identify Unethical Behavior & Protect Your Organisation with 3PRM™ Corporate Due Diligence & Risk Management

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 Group’s highly specialised assessment solution for Corporate Due Diligence and Third-Party Risk Management was developed to assist organisations in accurately identifying, preventing, mitigating, and addressing actual and potential adverse impacts of affiliating with global partners, and complies with all EU mandates.

From enhanced due diligence to identify non-compliance of regulatory framework and negative environmental allegations, to investigating company (or stakeholder) human rights violations related to labour laws, child labour or human trafficking, CRI Group 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 below. 

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MAKE THE IMPACT

“The global pandemic has demonstrated that resilient global supply chains that protect both the people and planet will be crucial to companies and economic recovery in the future”,Transparency International EU)

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:

• Enhances protection for workers
• Improves access to justice for victims
• Safeguards the environment
• Ensures fair products for consumers

Further, apart from general compliance with EU mandates, such organisations enjoy a wealth of intangible benefits, including:

• Reduced overall liability risks
• Improved stakeholder protection
• Lower costs resulting from conflicts
• Improved company transparency
• Deeper knowledge of the value chain
• Enhanced reputation in the market
• Improved social standards for workers

Are you prepared to conduct a due diligence assessment on your global partners and stay one step ahead of the pending EU mandates?

WHY CRI GROUP?

risk management, investigations, anti-bribery, anti-corruption, ABMS

RISK MANAGEMENT MADE EASY

CRI Group’s corporate due diligence and accountability solutions can help your organisation comply with a growing list of global regulations and mandates related to human rights and the environment, while acting as an integral part of your business decision-making and risk management systems.

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