The Dutch due diligence act
The Bill
In March 2021, a human rights due diligence legislation was introduced to the Dutch Parliament: the Law on Responsible and Sustainable International Business Conduct. This law aims to establish human rights due diligence for businesses. In November 2022, a significant step was taken when six Dutch political parties submitted this amended bill to the House of Representatives, demonstrating a bipartisan commitment to protecting human rights and the environment in the context of international business activities. At the heart of this proposal is the desire to comply with international directive standards, particularly the proposed European directive on corporate sustainability due diligence (Corporate Sustainability Due Diligence Directive). This alignment aims to ensure coherence and harmonization between national legal frameworks and emerging standards across the European Union. The revised proposal remains true to the initial 2021 law, establishing specific activity and size thresholds to determine the companies concerned. Thus, a company would be subject to the law’s obligations if it is a Dutch or European company conducting activities outside the Netherlands, or a non-European company conducting activities or marketing products in the Netherlands, provided it meets certain size and activity criteria defined by the European Accounting Directive.
Key Aspects of the Directive
A crucial aspect of the revised proposal is its intention to set stricter compliance thresholds than those proposed in the European directive on corporate sustainability due diligence. This approach reflects the Dutch legislators’ ambition to adopt rigorous standards in corporate social responsibility, thereby demonstrating their commitment to protecting human rights and the environment.
In addition to compliance thresholds, the revised proposal also details the due diligence obligations that concerned companies should adhere to. This includes taking reasonable measures to prevent, mitigate, or reverse potential negative impacts on human rights and the environment in their international business activities. Moreover, companies would be required to implement due diligence policies, integrate due diligence into their operational processes, and regularly monitor the effectiveness of these policies and processes.
Finally, the revised proposal includes sanction and enforcement mechanisms to ensure compliance with the law. The Dutch Market Surveillance Authority could be empowered to compel companies to comply with the law and impose penalties for non-compliance. Additionally, civil actions could be initiated by foundations and associations advocating for human rights and the environment, thereby strengthening accountability and enforcement mechanisms.
What Happens If a Company Fails to Publish a Statement or Child Labor Is Discovered?
Companies that fail to file a statement face a financial penalty of €4,100, although this is more symbolic. This fine can be increased in the case of additional complaints and if the legally binding directives and enforcement measures imposed by the regulatory authorities are not respected. However, there will be no proactive enforcement by regulatory authorities. Only complaints filed by a third party will trigger the application of the law. Any individual or entity (natural or legal) can file a complaint with the regulatory authority based on tangible evidence that the company’s products or services were manufactured using child labor. Anyone wishing to file a complaint must first address it to the company concerned. If the company’s response is deemed “unsatisfactory” by the complainant, they can then refer the matter to the regulatory authority. If the regulatory authorities conclude that the company has not exercised due diligence in accordance with the legislation, the authority will issue legally binding directives and a deadline for their implementation. If these directives are not respected, and the company is found in violation twice within five years, the next offense could lead to the imprisonment of the responsible director. In the most extreme case, non-compliance with the law can result in imprisonment and fines of up to €750,000 or 10% of the company’s annual turnover.
Effective Strategies to Combat Child Labor in Supply Chains
It is true that child labor remains a major global issue, but there are several strategies to prevent and combat it, particularly in company supply chains. As a company, you can play a crucial role in preventing and combating child labor in your production chain. First, it is important to educate and raise awareness about the dangers of child labor. By informing your employees, suppliers, and partners about the harmful effects of early labor, attitudes can change, and safer practices can be encouraged. Next, you can integrate child labor monitoring and remediation systems into your supply chain to identify, combat, and prevent child labor. Another option is to support access to quality education in the communities where you operate. This may involve building or renovating school infrastructure. Ensuring access to quality education is essential to breaking the cycle of child labor. By helping communities create a proper and accessible school environment, school enrollment and attendance rates can be increased, offering children a viable alternative to work. Finally, it is important to respect human rights and children’s rights in all your operations and supply chains. This means aligning your business practices with universal human rights standards and ensuring that your business partners also comply with all laws.