The EU Supply Chain Law, formally known as the EU Directive on Corporate Due Diligence and Corporate Accountability, is a legislative proposal aimed at enhancing corporate responsibility and accountability in global supply chains. Its primary objective is to address human rights abuses, environmental degradation, and unethical business practices often associated with global supply chains.
The key provisions of the proposed law include:
- Due Diligence Requirements: Companies operating within the EU will be required to conduct due diligence throughout their supply chains to identify, prevent, mitigate, and account for adverse impacts on human rights, the environment, and good governance.
- Scope: The law is expected to apply to large companies and their suppliers operating within the EU, as well as to companies selling goods and services in the EU market, irrespective of their location.
- Risk Assessment: Companies will need to assess the risks of adverse impacts in their supply chains and take appropriate measures to address these risks.
- Transparency and Reporting: The law is likely to mandate transparency and reporting requirements, requiring companies to disclose information about their supply chains, due diligence processes, and efforts to address adverse impacts.
- Enforcement and Sanctions: Mechanisms for enforcement and sanctions for non-compliance are expected to be included, though specifics may vary.
The EU Supply Chain Law aims to promote sustainable and responsible business practices, protect human rights, and prevent environmental harm throughout global supply chains. It aligns with international standards such as the UN Guiding Principles on Business and Human Rights and reflects growing societal expectations for corporate accountability.
