Foreword

Human rights and environmental due diligence for сompanies is a concept that has come of age in Europe. In 2021, we have new due diligence laws in place in Germany and Norway, which build on
the existing French Duty of Vigilance Law. Due diligence laws are under consideration also in Austria, Netherlands, Belgium, Finland and Luxembourg. The European Commission’s own Sustainable Corporate Governance directive is of immense importance in setting a Europe-wide legal framework for due diligence. The European Parliament has clearly stated the high level of ambition and the urgent need for bringing about sustainable business conduct for Europe and across the global value chains.

This report provides new evidence and analysis to underpin the design of effective due diligence. The report should demand extra attention as it assesses business’s due diligence conduct in perhaps the most egregious cases of labour rights abuse: forced labour and human trafficking, focusing on three high-risk sectors: ICT, food and beverage, and apparel and footwear.

The lessons drawn from this data across nine benchmarks spanning over five years are of vital importance. They serve to highlight that sustainable corporate governance rules in themselves are not a panacea. Their effectiveness in promoting human rights and environmental regeneration in business operations and in companies’ global value chains depends greatly on their design and on their implementation.

The report’s findings on the current state of business due diligence are very telling: over a third of companies in these high-risk sectors do not show any evidence that they are assessing human rights risk; and four out of five provide no evidence they are adopting responsible purchasing practices to mitigate the risk of forced labour in their supply chains. The glacial progress over five years also highlights the need for governments and parliaments to insist on action through laws, regulations and business incentives.
A systemic transition is not possible through voluntary guidance. But there is also good news: a small
but growing group of leading companies demonstrate the determination and wit to increasingly address these risks, to prevent contributing to the misery and indignity of workers held in forced labour.

The report’s recommendations underscore the need for rigour and determination in the design of new laws and regulations – whether due diligence or import controls. Lessons are drawn from corporate best practice, the labour movement’s experience, alongside failed half-measures. These all emphasise the need for design that avoids the failed model of ‘compliance’ through administrative list-ticking by companies. Instead, we must insist that companies actively seek out and mitigate their salient social and environmental risks through effective engagement with key stakeholders such as workers and communities.

Heidi Hautala

Vice-President of the European Parliament