New EU Directive to protect human rights and the environment set to impact business of all sizes

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Barrister and Professor of International Law and Human Rights at the University of Nottingham, Professor Robert McCorquodale, was speaking at The Holiday Inn at the recent Milton Keynes Business Leaders Partnership (MKBLP) dinner.

There have been growing calls for businesses, and by those in their supply chains, to be held more accountable for human rights and environmental breaches over recent years and for standards of corporate governance to be raised.

“Businesses large and small need to be held to account for their actions, no matter where they occur, in today’s globalised world, these actions can affect the human rights of someone far away.”  

Under the UN Guiding Principles on Business and Human Rights companies have a responsibility to undertake human rights due diligence and many governments, particularly across Europe, have introduced measures to increase corporate accountability. However, under the new EU Directive on Corporate Sustainability Due Diligence, companies and individual directors will become accountable under law.

Described as a watershed moment for human rights and the environment, the directive aims to prevent and protect against potential or actual negative impacts on human rights, the environment and good governance in supply chains. It also seeks to ensure that businesses can be held accountable for such impacts, and that anyone who has suffered harm can effectively exercise the right to a fair trial.

While only EU member states will fall under the directive, Professor McCorquodale explained that UK companies need to understand that it has the potential to impact them: “The directive doesn’t cover every company as it is size dependent, but it sets a threshold and will ultimately impact the entire supply chain. Every single British company that has trade or a supply chain within the EU will be affected. Be aware that these laws are coming.”

Outlining real cases and examining how companies, including SMEs, can respond to the Directive and take positive action by undertaking due diligence, Professor McCorquodale urged companies of all sizes to understand the risks of their activities and that of their supply chain to stakeholders: “We need to change the perspective, it’s no longer looking at the threats to business, organisations need to understand any consequential risks, no matter how small, their business may have on stakeholders.”