Our key takeaway: What is the point of a new due diligence duty if it fails to meet its intended outcome? Let’s take a step back: why are we discussing a new EU corporate sustainability due diligence duty to begin with? To help incentivize business practice that is respectful for people and planet. To help set a level playing field, so that companies that do conduct meaningful human rights due diligence and environmental due diligence are not penalised for doing so. To help push companies be more mindful about how their operations and supply chain activities can negatively impact people and planet, and help them do something about it - in a way that makes the situation better for those people involved and the planet. However, these objectives will not be achieved if companies conduct flawed due diligence - and if this flawed due diligence is perpetuated through the directive. Based on conversations with suppliers and local stakeholders on the ground, Shift asks us to be honest about what is happening in a number of instances of human rights due diligence (with a few exceptions): there is a one-sided top-down relationship between buyers and the suppliers; buyers are quick to penalise but slow to incentivize strong human rights performance by suppliers; buyers don’t provide financial or capacity-building support; buyers don’t connect the dots with how their own business practices could be contributing to these impacts in the first place; and buyers are not necessarily engaging with affected stakeholders - those who are supposed to be the beneficiary of this directive. The answer? Ensure that the directive tackles this head on by aligning with the international standards (UN Guiding Principles and OECD Guidelines). The directive needs to move companies from: (1) unilateral to mutual responsibilities, (2) punishment to incentives, (3) passive to active, (4) ‘out there’ to ‘in here’ and (5) avoidance to engagement.
Shift released From Policing to Partnership: Designing an EU Due Diligence Duty that Delivers Better Outcomes (May 2023):