• Avinder Laroya

A Review of The EU Directive on Human Rights Due Diligence And How It Impacts UK Businesses.

This article will review the EU Directive on Human Rights Due Diligence and the impact on business practices using slavery and forced labour in the supply chain.

The guiding principles were introduced to expand the framework by calling companies to avoid “causing or contributing to adverse human rights impacts through their own activities and to seek to prevent to mitigate those directly linked to their operations, products, or services.

This article will review the following:

  • The introduction of the EU directive on HRDD

  • The EU Directive

  • Concerns and issues with the EU Directive on HRDD

  • How will this impact UK businesses?

  • Conclusion and next steps

1. The introduction of the EU directive on Human Rights Due Diligence (HRDD)

The UN Guiding Principles on Business and Human Rights (UNGPs), were adopted by the UN Human Rights Council, drew the concept of companies undertaking human rights due diligence (HRDD). Although the UNGPs to date have not been legally binding, this is now changing. Historically the UN Guiding Principles have been widely accepted by governments and multinational companies.

June 2021 marked the 10-year anniversary of the UNGPs and eleven years on, there has been little progress in creating real change in business practices as slavery and forced labor are still issues within the supply chain. With the absence of international legal obligations to address the infringement of human and environmental rights by companies, there have been widespread calls from civil societies and even some companies for governments to mandate corporate action in addressing human and environmental rights and impose legal action if they fail.

2. The EU Directive

On February 23, 2022, the European Commission released its long-awaited proposed Directive on Corporate Sustainability Due Diligence, which requires companies to play a greater and more active role in ensuring environmental and HRDD.

The EU Directive provides that businesses must conduct due diligence to identify and then cease or mitigate the actual and potential human rights and environmental impacts of their operations, subsidiaries and business relationships within the supply chain. This Directive will be enshrined in EU law binding due diligence requirements that draw heavily from the UNGPs.

The Directive will apply to companies within and outside the EU, depending on their turnover, number of employees and/or sector.The legislative proposal was recently adopted by the Commission, it does not yet have legal effect. The next step is for the proposal to be presented to the European Parliament and the Council for approval. During this process, the Directive will likely be amended and once adopted, EU Member States would have two years to transpose the Directive into national law, which would be legally binding on companies.

1. The concerns and issues raised with the EU Directive on HRDD

Although the Directive on HRDD is a positive step towards the implementation of the human rights, there are some significant issues that are not addressed.

Firstly, Small and Medium Enterprises (SMEs) are not directly covered by the draft Directive. The Directive limits its definition of the scope of companies covered by the duty to do due diligence to include large companies in only three sectors (textiles, a