The law on due diligence and third-party assessment: a detailed overview and implications for companies in Europe

Due diligence legislation is evolving rapidly in Europe, with major implications for companies in terms of social and environmental responsibility. This article explores the main provisions of due diligence law and the progress being made at European level, while highlighting the importance of a holistic and integrated approach to ensuring compliance and contributing to a sustainable future for all.

The main provisions of the due diligence law

The Due Diligence Act, also known as the Corporate Sustainability Due Diligence Directive, aims to strengthen companies’ responsibility for human rights and the environment in their supply chains. The main provisions of the law include:

  1. Due diligence: Companies are required to carry out a risk assessment to identify the potential impacts of their activities and supply chain on human rights and the environment.
  2. Implementation of prevention and mitigation measures: Companies must implement appropriate measures to prevent, mitigate or remedy identified impacts.
  3. Transparency and communication: Companies are required to communicate publicly about their due diligence policies and practices, as well as the results of their risk assessments and the measures taken in response.
  4. Complaints and redress mechanisms: Companies must put in place complaints and redress mechanisms to enable affected stakeholders to report problems and obtain redress.

Progress on due diligence legislation at European level

At European level, the institutions of the European Union (EU) have recognized the importance of human rights and environmental due diligence, and are working to develop a harmonized legislative framework for member states.

In 2021, the European Commission presented a proposal for a directive on due diligence, which aims to establish minimum requirements for companies in terms of due diligence. This proposal was adopted on June 1 by the European Parliament and is currently being examined by the Council of the EU, and could be adopted and implemented in member states in the coming years.

At the same time, several EU member states have already adopted national legislation on due diligence, such as the French Duty of Vigilance Act, the French Sapin 2 Act and the German Supply Chain Act.

These national laws have served as models for future European legislation, and are helping to shape the debate on due diligence standards and requirements at European level.

The importance of a holistic and integrated approach to due diligence

Compliance with due diligence legislation requires a holistic and integrated approach, taking into account the social, environmental and economic dimensions of a company’s activities. Here are some key elements for a successful approach:

  • Management commitment: Management commitment and support are essential to ensure the successful adoption and implementation of due diligence practices throughout the company.
  • Internal and external collaboration: Due diligence often involves working closely with different departments within the company, as well as with external partners such as suppliers, customers and non-governmental organizations.
  • Training and capacity building: Employees and supply chain partners must be trained and equipped to understand and implement due diligence requirements.
  • Monitoring and evaluation: Companies must put in place monitoring and evaluation mechanisms to measure the effectiveness of their due diligence practices and identify areas for improvement.
  • Adaptability and continuous improvement: legislation and stakeholder expectations regarding due diligence are changing rapidly. Companies must be ready to adapt and improve their due diligence practices in line with these changes.

In conclusion, due diligence legislation is progressing rapidly at European level, with major implications for companies in terms of social and environmental responsibility. To successfully meet these challenges and ensure compliance, companies need to adopt a holistic and integrated approach to due diligence, leveraging internal and external resources, building the capabilities of their employees and partners, and engaging in a process of continuous improvement. Adopting a solution such as Flair Diligence can facilitate this process and contribute to the company’s success in this evolving regulatory environment.