Monday, June 13, 2022

The Year of Due Diligence as a Legal Construct: Claire Methven O'Brien and Olga Martin-Ortega on "Commission proposal on corporate sustainability due diligence: analysis from a human rights perspective"


 2022 is shaping up to be the year of due diligence. This is an especially European project.  Unable to resist the temptation of legalizing the corporate responsibility to respect human rights, while ignoring the rationalization of a comprehensive and globally coherent practice of state duty to protect human rights, European states and the European Union have been at the forefront of using the concept of "due diligence as the turn key compliance based concept for the regulation of corporate regulation of its private law based governance systems through global production chains. Not that this is necessarily a bad thing.  Done correctly, the legalization of privately administered compliance and accountability based regimes of due diligence, through state based regal regimens is promising.  Such approaches, of course, have several challenges: (1) extraterritoriality and the constraints of blocking legislation; (2) respect for the corporate form across national boundaries; (3) choice of law and forum issues; (4) alignment of national with international standards (the "I will apply international standards as my national courts determine" syndrome); (5) coordination with bilateral other investment agreements; and (6) enforcement across borders.

It is in that context that Claire Methven O'Brien and Olga Martin-Ortega provide an excellent analysis on the EU's proposal for sustainable due diligence. The abstract of their work, "Commission proposal on corporate sustainability due diligence: analysis from a human rights perspective" explains:

On 23 February 2022, the European Commission (EC) published its proposal for a corporate sustainability due diligence directive. This In-depth Analysis for the European Parliament Sub-Committee on Human Rights (DROI) initially presents the EC proposal and its main features, contextualising these against broader European and international developments in business and human rights regulations. It then undertakes an in-depth comparative analysis of the EC’s 2022 draft Directive against (i) the position adopted by the Foreign Affairs Committee (AFET/DROI) in its opinion for the Legal Affairs Committee of 25 November 2020; (ii) the final EP position as adopted in March 2021. This is followed by evaluation of the EC draft Directive’s approach on key elements relating to human rights and environmental due diligence from the point of view of human rights standards and in light of the rationale presented in the EC’s Impact Assessment Report (23 February 2022) and Annexes (29 March 2022). Overall, the analysis provides an assessment of the extent to which key positions of AFET/DROI and the Parliament regarding human rights due diligence, as well as relevant international and regional legal standards, policies and guidance, are either reflected in the EC draft Directive or might be better reflected in it. ("Commission proposal on corporate sustainability due diligence: analysis from a human rights perspective").

The analysis is worth a careful read.  It may be accessed HERE.


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