Moving the Global Supply Chain Needle? The Impact of the EU's Proposal for a Corporate Sustainability Due Diligence Directive
The Firm hosted a webinar in which our global supply chain lawyers discussed how the draft EU Directive on Corporate Sustainability Due Diligence will impact companies in the global supply chain and how the Directive differs from the U.S. framework.
- Legislators around the world are increasingly focused on ESG issues in corporate supply chains, taking different approaches regarding the scope and specific requirements of new supply chain-related laws. Liability regimes for noncompliance also vary significantly.
- The new draft EU Corporate Sustainability Due Diligence Directive proposes new obligations for companies regarding adverse impacts on human rights, the environment, and climate change. These obligations cover subsidiaries as well as entities with which the company has an established business relationship, even if established outside of Europe.
- If implemented in its current form, the draft EU Directive would have a more global impact, compared to existing French and German supply chain due diligence laws, which would also need to be modified and adapted.
- While the Draft EU Directive only applies directly to large companies, smaller companies and companies outside the EU need to be aware of the potential for indirect impact where such companies are suppliers to large EU companies.
- At a practical level, the legislative focus on ESG in supply chains means that companies need to have a detailed picture of their existing supplier arrangements. Those companies that are well prepared now will have the best chance of successfully implementing global arrangements to comply with these complex, wide-ranging, and potentially conflicting supply chain due-diligence laws.
- Preparation and anticipation in view of the growing focus on ESG in supply chains in Europe would also reduce the risk of litigation or help in responding to likely claims from NGOs (as shown by the pending duty of vigilance litigation proceedings in France following the adoption of the French Duty of Vigilance Law in 2017).
- Aidan Lawes, Of Counsel, Financial Markets, London
- Dr Jürgen Beninca, Partner, Antitrust & Competition Law, Frankfurt
- Bethany K. Biesenthal, Partner, Investigations & White Collar Defense, Chicago
- Linda A. Hesse, Partner, Financial Markets, Paris
- Françoise S. Labrousse, Practice Leader, Government Regulation, Paris