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Businesses are facing growing demands from investors to disclose information on climate risks, opportunities, workforce planning, and labour practices. Increasing regulations such as UK’s Human Rights and Environment) Bill (UK) or EU’s Corporate Sustainability Due Diligence Directive (CSDDD), required companies to proactively assess actual and potential impacts of their operations on the environment and human rights.
Understanding the recent corporate due diligence requirements is essential for improving brand reputation, fostering robust stakeholder relationships, and progressing sustainability initiatives. Conversely, a lack of awareness exposes businesses to risks, such as regulatory non-compliance and missed opportunities to enhance operations, sustainability, and engagement, among other potential drawbacks.
Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (UK)
The proposed UK Bill seeks to create a fairer business environment, clarify legal obligations, and improve access to justice. It aims to align UK law with international standards, including the UN Guiding Principles on Business and Human Rights, OECD Guidelines, and ILO Multinational Enterprises Guidelines. This legislation is being discussed currently, alongside other proposed laws, under the Environment Act, which focus on addressing environmental supply chain issues.
Corporate Sustainability Due Diligence Directive (CSDDD) (EU)
The directive on corporate sustainability due diligence (CSDDD) imposes obligations on companies, to mitigate negative impacts on human rights and the environment, such as child labour, slavery, pollution, and deforestation. Businesses will be required to integrate “due diligence” into their policies and risk-management systems, outlining their approach, processes, and code of conduct; and adopt a plan ensuring their business model complies with limiting global warming to 1.5°C.
The legislation applies to EU companies with over 500 employees and a global turnover exceeding 150 million euros, extending to non-EU companies with equivalent turnover in the EU. (The obligations will also apply to companies with over 250 employees and with a turnover of more than 40 million euro if at least 20 million are generated in one of the following sectors: manufacture and wholesale trade of textiles, clothing and footwear, agriculture including forestry and fisheries, manufacture of food and trade of raw agricultural materials, extraction and wholesale trade of mineral resources or manufacture of related products and construction.)
