How will the new Corporate Sustainability Due Diligence Directive of the European Union improve the practices of companies in ensuring the respect of human rights in their operations and value chains?

Details

Supervisors

Denis, Sabine

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

The emergence of international trade has led to the multiplication of various human rights abuses in the corporate world that are often left unpunished as companies hide beyond their complect supply chains. As a result, different types of frameworks, such as international guidelines and national legislation have emerged to encourage companies to identify, mitigate, and account for the negative effects of their operations, as well as those of their value chains which is known as “human rights due diligence”. However, those have been deemed insufficient. Hence, as part of its Green Deal strategy, the European Commission has developed a proposal for a Corporate Sustainable Due Diligence Directive that would oblige certain large EU and non-EU companies to implement a due diligence process to account for the impacts of their operations and value chains on human rights and the environment. This directive has the potential to genuinely improve companies’ practices. The directive's clear legally binding requirements motivate businesses to enhance their practices to avoid civil liability and sanctions. It represents the EU's commitment to creating a level playing field and provide legitimacy for companies. The directive encourages real awareness and a proactive, preventative attitude. However, the current draft of the document has shortcomings, and the sensitive nature of the human rights subject may make transparency difficult. Additionally, the complexity of value chains is one of the challenges companies will have to tackle.