Corporate due diligence and corporate accountability

20-10-2020

This study analyses the potential European Added Value of a measure requiring companies to carry out due diligence on social, environmental and governance risks in their own operations and supply chain. There is evidence of human rights violations and environmental negative impacts related to business activities. This measure could increase firm compliance to international principles of responsible business conduct, increase access to remedy for victims, improve legal certainty and create a level playing field for businesses. This study reviews possible sources of costs and benefits for companies and, based on original analysis, suggests that stronger environmental and social accountability practices could contribute to improving EU firms' performance. From a qualitative analysis, it suggests a potential significant impact in addressing risks of environmental damages and human rights violations in global value chains, thus supporting EU commitment to human rights and environmental protection.

This study analyses the potential European Added Value of a measure requiring companies to carry out due diligence on social, environmental and governance risks in their own operations and supply chain. There is evidence of human rights violations and environmental negative impacts related to business activities. This measure could increase firm compliance to international principles of responsible business conduct, increase access to remedy for victims, improve legal certainty and create a level playing field for businesses. This study reviews possible sources of costs and benefits for companies and, based on original analysis, suggests that stronger environmental and social accountability practices could contribute to improving EU firms' performance. From a qualitative analysis, it suggests a potential significant impact in addressing risks of environmental damages and human rights violations in global value chains, thus supporting EU commitment to human rights and environmental protection.