The UN Guiding Principles captured in the European Parliament’s proposed EU corporate sustainability due diligence duty

Anna Triponel

June 2, 2023

It’s finally here! The European Parliament’s proposed text for the EU corporate sustainability due diligence directive. See here. The UN Guiding Principles on Business and Human Rights is woven throughout the text.

In short, we are much closer to a legal requirement for companies to conduct due diligence to identify, assess and address human rights and environmental harm.

For those companies who have not yet focused on embedding the UN Guiding Principles on Business and Human Rights into their business, who have not focused on environmental due diligence and what it means to conduct environmental and human rights due diligence together, or who do not have a climate transition plan in place - now is the time.

What was the EU journey?

The soft law instruments that expect environmental and human rights due diligence (the UN Guiding Principles on Business and Human Rights and the OECD Guidelines on Multinational Enterprises) have been around since 2011. 

Companies have been putting the policies and processes expected in these documents in place since then - reinforced by investor demands, consumer expectations, and business partner expectations, as well as growing legal expectations. 

The EU journey to transform these soft law instruments into hard law started in earnest in 2020. The European Commission said then that it was going to publish a proposal for a directive on sustainable corporate governance – including mandatory human rights and environmental due diligence with respect to impacts in company supply chains.

On 10 March 2021, the European Parliament voted to request that companies by law conduct environmental and human rights due diligence along their full value chains. The European Parliament is not the body responsible for drawing up proposals for new European legislation – that is the job of the executive branch of the EU (the European Commission). So essentially, the European Parliament’s draft was about EU lawmakers conveying to the executive what they would envision this law containing. 

The European Commission released its proposed draft on 23 February 2022. In November 2022, EU member states adopted their position on the draft directive.

Then on 25 April 2023, the European Parliament's Legal Affairs Committee (JURI) voted to adopt a report containing updated draft text for the European Commission’s proposal for a Directive on corporate sustainability due diligence. See here.

And yesterday, 1st June, the European Parliament approved its negotiating position for the Corporate Sustainability Due Diligence Directive. It is available here.

Now that Parliament has adopted its position, negotiations with member states on the final text of the legislation can begin!

What is this directive about?

According to the European Parliament: “This Directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies by respecting human rights and the environment, through the identification, prevention and mitigation, bringing to an end remediation and minimisation, and where necessary, prioritisation, of potential or actual adverse human rights and environmental impacts connected with companies’ own operations, subsidiaries and value chains, and ensuring that those affected by a failure to respect this duty have access to justice and legal remedies.”

In short: “In order to conduct appropriate human rights and environmental due diligence with respect to their operations, their subsidiaries, and their value chains, companies covered by this Directive should integrate due diligence into corporate policies, identify, where necessary, prioritise, prevent, mitigate, remediate as well as bring to an end and minimise the extent of potential and actual adverse human rights and environmental impacts, establish or participate in a notification and non-judicial grievance mechanism, monitor and verify the effectiveness of their actions taken in accordance with the requirements that are set up in this Directive, communicate publicly on their due diligence, and engage with affected stakeholders throughout this entire process. In order to ensure clarity for companies, in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end, or when this is not possible, minimising the extent of actual adverse impacts should be clearly distinguished in this Directive.”

Why this directive?

In the words of the European Parliament: “The behaviour of companies across all sectors of the economy is key to success in the Union’s sustainability objectives as many Union companies rely on global value chains. It is also in the interest of companies to protect human rights and the environment, in particular given the rising concern of consumers and investors regarding these topics. Several initiatives fostering enterprises which support value- oriented transformation already exist on Union, as well as national level, including binding legislation in several Member States such as France and Germany, which gives rise to the need for a level playing field for companies in order to avoid fragmentation and to provide legal certainty for businesses operating in the single market. It is moreover essential to establish a European framework for a responsible and sustainable approach to global value chains, given the importance of companies as a pillar in the construction of a sustainable society and economy.”

The European Parliament updates the rationale for the directive, with recent developments. Specifically: “In the current geopolitical situation arising from Russian aggression in Ukraine, the energy crisis, the continuing fallout from COVID-19 and attempts to maintain and strengthen the security of the agri-food chain, the private sector could help promote sustained, inclusive and sustainable economic growth, while avoiding the creation of imbalances on the internal market.”

What are the relevant international frameworks?

The draft directive references “[w]ell-established existing international standards on responsible business conduct” which are: “the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises clarified in the OECD Due Diligence Guidance for Responsible Business Conduct.”

“Companies should have guidance at their disposal that illustrates how their activities may impact human rights and which corporate behaviour is prohibited in accordance with internationally recognised human rights. Such guidance is included for instance in The United Nations Guiding Principles Reporting Framework and the United Nations Guiding Principles Interpretative Guide105 and should be made easily accessible to companies. Therefore, using relevant international guidelines and standards as a reference, the Commission should be able to issue additional guidance that will serve as a practical tool for companies.”

When it comes to the actual standards to comply with, the draft directive refers to “human rights, as enshrined in the international conventions and instruments listed in the Annex, Part I, Section 2.” At the same time, the directive makes clear that “[i]n order to ensure a comprehensive coverage of human rights, a negative impact on the enjoyment of a right not specifically listed in that Annex which directly impairs a legal interest protected in those conventions and instruments should also form part of the adverse human rights impact covered by this Directive, provided that the company concerned could have reasonably established the risk of such impairment and any appropriate measures to be taken in order to comply with the due diligence obligations under this Directive, taking into account all relevant circumstances of their operations, such as the sector and operational context.”

The directive also covers environmental impacts “resulting from the violation of one of the prohibitions and obligations listed in the Annex to this Directive.”

Obligation of means, or of results?

The directive makes clear what this obligation is: an obligation of means, consistent with the UN Guiding Principles and OECD Guidelines. “Companies should take appropriate steps within their means to set up and carry out due diligence measures, with respect to their own operations, those of their subsidiaries, as well as their direct and indirect business relationships in their value chains in accordance with the provisions of this Directive. This Directive should not require companies to guarantee, in all circumstances, that adverse impacts will never occur or that they will be stopped. … Therefore, the main obligations in this Directive should be ‘obligations of means’. The company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case, proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and the size, resources, and capacities of the company. Account should be taken of the specificities of the company’s value chain, sector or geographical area in which its value chain partners operate, the company’s power to influence its business relationships, and whether the company could increase its power of influence.”

How far down the value chain?

The European Parliament makes clear that “[a]dverse human rights, and environmental impacts occur in companies’ own operations, subsidiaries, products, services, and in their value chains, in particular at the level of raw material sourcing, manufacturing, or at the level of product or waste disposal. In order for the due diligence to have a meaningful impact, it should cover human rights, and environmental adverse impacts generated throughout the life-cycle of production and sale and waste management of product or provision of services, at the level of own operations, subsidiaries and in value chains.” 

Specifically: “The value chain should cover activities related to the production, distribution and sale of a good or provision of services by a company, including the development of the product or the service and waste management of the product as well as the related activities of business relationships of the company. It should encompass the activities of a company’s business relationships related to the design, extraction, manufacture, transport, storage and supply of raw material, products, parts of products, as well as the sale or distribution of goods or the provision or development of services, including waste management, transport and storage, excluding the waste management of the product by individual consumers.”

The draft directive’s preamble addresses the downstream question: “In some situations once products are sold or distributed by a business relationship, companies may have diminished ability to monitor impacts in order to take reasonable steps to prevent or mitigate them. In such situations, identifying actual and potential impacts and taking preventive or mitigating actions will be important prior to and at the point of initial sale or distribution, and in follow up or ongoing interactions with those business relationships when such impacts are reasonably foreseeable or when notified of significant impacts through the notification procedure.”

And when it comes to recycled content, the text states that: “When a company sources products containing recycled material, it may be difficult to verify the origins of the secondary raw materials. In such situations the company should take appropriate measures to trace secondary raw materials to the relevant supplier and evaluate whether there is adequate information to demonstrate that the material is recycled.”

What is the lay of the land on climate?

The draft directive references the fact that “the United Nations Framework Convention on Climate Change, to which the EU and the Member States are parties, such as the Paris Agreement and the recent Glasgow Climate Pact, set out precise avenues to address climate change and keep global warming within 1.5 C degrees.” It highlights that “the role of the private sector, in particular its investment strategies is also considered central to achieve these objectives.” Specifically, the draft directive brings in recent research to underscore the importance of climate-related expectations of companies. “While just 100 companies have been the source of more than 70% of the world’s greenhouse gas emissions since 1988, there is a fundamental mismatch between corporate climate commitments and their actual investments to fight against climate change. This Directive is therefore an important legislative tool to avoid any misleading climate neutrality claims and to stop greenwashing and fossil fuels expansion worldwide in order to achieve international and European climate objectives, also recommended by the latest scientific reports.” 

The draft directive brings in the notion of just transition. It adds in reference to “The General Union Environmental Action Programme to 2030” as “the framework for [EU] action in the field of the environment and climate, aims to accelerate the green transition to a climate-neutral, sustainable, non-toxic, resource-efficient, renewable energy-based, resilient and competitive circular economy in a just, equitable and inclusive way, and to protect, restore and improve the state of the environment by, inter alia, halting and reversing biodiversity loss.” It underscores the fact that the “2019 Communication on the European Green Deal sets out that all Union actions and policies should pull together to help the Union achieve a successful and just transition towards a sustainable future in which no one is left behind.”

“In order to ensure that this Directive effectively contributes to combating climate change, companies should in consultation with stakeholders adopt and implement a transition plan in line with the reporting requirements in Article 19a of Directive (EU) 2022/2464 (CSRD) to ensure that the business model and strategy of the company are aligned with the objectives of the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement, as well as the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119 (European Climate Law), and the 2030 climate target. The plan should take into account the value chain and include time-bound targets related to their climate objectives for scope 1, 2 and, where relevant, 3 emissions, including, where appropriate, absolute emission reduction targets for greenhouse gas including, where relevant, methane emissions, for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence, except where a company can demonstrate that its operations and value chain do not cause greenhouse gas emissions and that such emission reduction targets would therefore not be appropriate. The plans should develop implementing actions to achieve the company’s climate targets and be based on conclusive scientific evidence, meaning evidence with independent scientific validation that is consistent with the limiting of global warming to 1.5°C as defined by the Intergovernmental Panel on Climate Change (IPCC) and taking into account the recommendations of the European Scientific Advisory Board on Climate Change.”

When it comes to directors’ variable remuneration: “Transition plans should include clear obligations for directors and board members to ensure that environmental and climate risks and impacts are addressed in the company’s strategy. With a view to increasing the financial incentives of directors, companies with more than 1000 employees on average should have a relevant and effective policy in place to ensure that a part of the directors’ variable remuneration is linked to the achievement of the targets of the company’s transition plan for combating climate change.”

Which companies are covered?

“[C]ompanies with more than 250 employees on average and a worldwide net turnover exceeding EUR 40 million in the financial year preceding the last financial year or companies which are the ultimate parent company of a group that had 500 employees and a net worldwide turnover of more than 150 million in the last financial year for which annual financial statements have been prepared should be required to comply with due diligence.”

In addition, the calculation of the thresholds “include the number of employees and turnover of a company’s branches, which are places of business other than the head office that are legally dependent on it, and therefore considered as part of the company, in accordance with EU and national legislation.” “Temporary agency workers and other workers in non-standard forms of employment should be included in the calculation of the number of employees in the user company.”

Note that the different treatment of high-impact sectors that was present in the European Commission’s draft has been replaced by this - the same threshold that applies to all sectors. 

The draft directive also applies to third-country companies “which generated a net turnover of at least EUR 40 million in the Union in the financial year preceding the last financial year or companies which are the ultimate parent company of a group that had 500 employees and a net worldwide turnover of more than 150 million and at least 40 million was generated in the Union in the last financial year for which annual financial statements have been prepared.”

Modes of involvement?

The draft directive captures the three modes of involvement present in the UN Guiding Principles. “The way a company can be involved in an adverse impact varies. A company can cause an adverse impact where its activities on their own are sufficient to result in an adverse impact. A company can contribute to an adverse impact where its own activities, in combination with the activities of other entities, cause an impact, or that the activities of the company cause, facilitate or incentivise another entity to cause an adverse impact. The contribution must be substantial, meaning that it does not include minor or trivial contributions. Assessing the substantial nature of the contribution and understanding when the actions of the company may have caused, facilitated or incentivised another entity to cause an adverse impact can involve the consideration of multiple factors. Several factors can be taken into account, including the extent to which a company may encourage or motivate an adverse impact by another entity, i.e. the degree to which the activity increased the risk of the impact occurring, the extent to which a company could or should have known about the adverse impact or potential for adverse impact, i.e. the degree of foreseeability, and the degree to which any of the company's activities actually mitigated the adverse impact or decreased the risk of the impact occurring. The mere existence of a business relationship or activities which create the general conditions in which it is possible for adverse impacts to occur should not in itself constitute a relationship of contribution. The activity in question should substantially increase the risk of adverse impact. Lastly, a company can be directly linked to an impact, where there is a relationship between the adverse impact and the company’s products, services or operations through another business relationship and where the company has neither caused nor contributed to the impact. Directly linked is not defined by a direct business relationship. Also, a direct linkage should not imply that the responsibility shifts from the business relationship causing an adverse impact to the company with which it has a linkage.”

For instance: “Where a company has caused or contributed to an actual adverse impact, the company should take appropriate measures to remediate that impact. … Where a company is directly linked to an adverse impact, it should be allowed to voluntarily participate in any remedial measures, where appropriate, and consider using its leverage with responsible parties to enable the remediation of any damage caused by an impact.”

Prioritisation of impacts?

The directive reflects the salience methodology for prioritisation - as set forth in the UN Guiding Principles and UNGP Reporting Framework: “Where the company cannot prevent, bring to an end or mitigate all the identified and assessed adverse impacts simultaneously, it should be allowed to prioritise the order in which it takes appropriate measures based on the severity and likelihood of the adverse impact and taking into account risk factors, by developing, implementing and regularly reviewing a prioritisation strategy. In line with the relevant international framework, the severity of an adverse impact should be assessed based on the scale, scope and irremediable character of the adverse impact, taking into account the gravity of an adverse impact, including the number of individuals that are or will be affected, the extent to which the environment is or may be damaged or otherwise affected, its irreversibility and the limits on the ability to restore affected individuals or the environment to a situation equivalent to their situation prior to the impact. Once the most severe and adverse impacts are addressed, the company should address less severe and less likely adverse impacts.”

In particular: “Companies should prioritise impacts on the basis of severity and likelihood. The degree of leverage a company has over a business relationship is not relevant to its prioritisation decisions or processes. However, the degree of leverage can influence the appropriate measures that a company chooses to adopt in order to effectively mitigate and/or prevent impacts associated with business partners.”

Civil liability?

“In order to ensure effective compensation of victims of adverse impacts, Member States should be required to lay down rules governing the civil liability of companies for damages arising due to its failure to comply with the due diligence process. The company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and mitigate them, or provide remediation, and as a result of this failure the company caused or contributed to an adverse impact that should have been identified, prioritised, prevented, mitigated, brought to an end, remediated or its extent minimised through the appropriate measures, and led to damage.”

In addition: “In the assessment of the existence and extent of liability, due account should be taken of the company’s efforts, insofar as they relate directly to the damage in question, to take remedial action, including that required of them by a supervisory authority, any investments made and any targeted support provided as well as any collaboration with affected stakeholders and other entities to address adverse impacts in its value chains.”

Also: “the possibility for a company to prioritise, when necessary, should be taken into consideration for its potential liability .… Provided that the prioritisation was done faithfully with regard to the severity and likelihood of the adverse impact, a company should not be held liable if an adverse impact arises from an activity or operation that was legitimately not prioritised.”

When it comes to burden of proof: “The liability regime does not regulate who should prove that the company’s action was reasonably adequate under the circumstances of the case, however Member States may foresee in their national law that where a claimant provides prima facie elements substantiating the likelihood of the defendant’s liability, the defendant is held liable, unless it can prove that it has complied with its obligations under this Directive.”

(There are penalties for non-compliance too: fines, suspension of products from free circulation or export, public statements, ban from public procurement in the EU).

Other areas of interest?

Policy, embedding and purchasing practices: “In order to ensure that due diligence forms part of companies’ corporate policies, and in line with the relevant international framework, companies should integrate due diligence into their relevant corporate policies and at all levels of operation and have in place a due diligence policy with short-, medium- and long- term measures and targets. The due diligence policy should contain a description of the company’s approach to due diligence, a code of conduct defining the rules, principles and measures to be followed and implemented where relevant throughout the company and its subsidiaries across all corporate operations; a description of the processes put in place and appropriate measures taken to implement due diligence … in the value chain, including the relevant measures taken to incorporate due diligence into its own business model, employment and purchasing practices with entities with which the company has a business relationship and measures taken to monitor and verify due diligence activities, and adequate policies to avoid passing on the costs of the due diligence process to business partners in a weaker position. The code of conduct should apply in all relevant corporate functions and operations, including pricing practices and purchasing decisions, for instance on trading and procurement. Companies should also update their due diligence policy when significant changes occur.”

Stakeholder engagement: “Companies should take appropriate measures to carry out meaningful engagement with affected stakeholders allowing for genuine interaction and dialogue in their due diligence process. Engagement should cover information and consultation of affected stakeholders and should be comprehensive, structural, effective, timely and culturally and gender responsive. There are situations in which it will not be possible to carry out meaningful engagement with affected stakeholders, or where engagement with additional expert perspectives is useful to allow the company to comply fully with the requirements of this Directive, in particular in the context of scoping and prioritisation decisions. In these cases companies should engage in meaningful engagement with other relevant stakeholders, such as civil society organisations or legal or natural persons defending human rights or the environment in order to gain credible insights into potential or actual adverse impacts. Consultation should be ongoing and companies should provide comprehensive, targeted and relevant information to affected stakeholders. Affected stakeholders should have the right to request additional written information, which should be provided by the company within a reasonable amount of time and in an appropriate and comprehensive format….”

Corruption: “Adverse human rights and environmental impacts can be intertwined or underpinned by factors such as corruption and bribery, hence their inclusion in the OECD Guidelines for Multinational Enterprises. It therefore may be necessary for companies to take into account these factors when carrying out human rights and environmental due diligence.”

Living wage: “Companies should also be responsible for using their influence to contribute to an adequate standard of living in value chains. This is understood as a living wage for employees and a living income for self-employed workers and smallholders, which they earn from their work and production and must meet their needs and those of their family.”

Contractual provisions: “The contractual provisions should not be such as to result in the transfer of responsibility for carrying out due diligence in accordance with this Directive and the liability for failing to do so. Moreover, the contractual provisions should be fair, reasonable and non- discriminatory under the circumstances, and should reflect the joint tasks of parties to conduct due diligence in ongoing cooperation. Companies should also assess whether the business partner can reasonably be expected to comply with those provisions. Often contractual terms are unilaterally imposed on a supplier by a buyer, and any breach thereof is likely to result in unilateral action by the buyer, such as termination or disengagement. Such unilateral action is not appropriate in the context of due diligence and would probably itself result in adverse impacts. In cases where the breach of such contractual provisions gives rise to a potential adverse impact, the company should first take appropriate measures to prevent or adequately mitigate such impacts, rather than considering ending or suspending the contract, in accordance with applicable law. To ensure comprehensive prevention of actual and potential adverse impacts, companies should also make investments which aim to prevent adverse impacts, provide targeted and proportionate financial and administrative support for an SME with which they have a business relationship such as financing, for example, through direct financing, low- interest loans, guarantees of continued sourcing, and assistance in securing financing, to help implement the code of conduct or prevention action plan, or technical guidance such as in the form of training, management systems upgrading, and collaborate with other companies.”

Responsible disengagement: “In order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts, this Directive should ensure that disengagement is a last-resort action. … Terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. In the same line, women in precarious labour conditions could face more severe adverse human rights impacts thus increasing their vulnerability. This should therefore be taken into account when deciding on the appropriate action to take, and disengagement should be avoided where the impact of disengagement would be greater than the adverse impact the company is seeking to prevent or mitigate. In situations of state-imposed forced labour, where the adverse impact is organised by political authorities, unhindered engagement with those adversely impacted and mitigation are not possible. This Directive should ensure that companies terminate a business relationship where state-imposed forced labour is occurring. Moreover, responsible disengagement should also take into account the possible negative impacts on companies depending on the product or affected by disruptions of supply chains.”

Also, “In deciding to terminate or suspend a business relationship, the company should assess whether the adverse impacts of that decision would be greater than the adverse impact which is intended to be prevented or mitigated. Where companies do temporarily suspend commercial relations or terminate the business relationship, they should take steps to prevent, mitigate, or bring to an end the impacts of suspension or termination, provide reasonable notice to the business partner and keep that decision under review.”

Critical raw materials: “Global value chains in particular critical raw materials value chains, are impacted by detrimental effects of natural or man-made hazards. The risks in critical value chains have been made apparent by the COVID-19 crisis while the frequency and impact of those shocks are likely to increase in the future, constituting a driver for inflation and leading to a subsequent increase of macroeconomic volatility as well as market and trade uncertainty. To address this, the EU should initiate an annual Union-wide assessment of the resilience of companies to adverse scenarios.”

Multi-stakeholder initiatives: “Industry schemes and multi- stakeholder initiatives can help create additional leverage to identify, mitigate, and prevent adverse impacts. Therefore it should be possible for companies to participate in such initiatives to support aspects of their due diligence, including to coordinate joint leverage, achieve efficiencies, scale up best practices, and seek expertise relevant to specific sectors, geographies, commodities or risk issues. The meaning of initiatives is broad and includes initiatives that support, monitor, evaluate, certify and/or verify aspects of a company’s due diligence, or the due diligence conducted by its subsidiaries and/or business relationships. Such initiatives may be developed and overseen by governments, industry associations, groupings of interested organisations, social partners or civil society organisations, and include monitoring organisations, global framework agreements, sector dialogues and initiatives that certify aspects of due diligence. In order to ensure full information on such initiatives, the Directive should also refer to the possibility for the Commission and the Member States to facilitate the dissemination of information on such schemes or initiatives and their outcomes. The Commission, in collaboration with Member States, the OECD and relevant stakeholders, should issue guidance for assessing the precise scope, alignment with this Directive, and credibility of industry schemes and multi-stakeholder initiatives. Companies participating in industry or multi-stakeholder initiatives or using third party verification for aspects of their due diligence should still be able to be sanctioned or found liable for violations of this Directive and damage suffered by victims as a result. The minimum standards for third-party verifiers to be adopted via delegated acts under this Directive should be developed in close consultation with all relevant stakeholders and reviewed in light of their appropriateness in accordance with the objectives of this Directive. Third-party verifiers should be subject to oversight by the relevant authorities and, where necessary, be subject to sanctions, in accordance with national and EU legislation.”

One Health: “This Directive acknowledges the 'One Health' approach as recognised by the World Health Organization, an integrated and unifying approach that aims to sustainably balance and optimise the health of people, animals and ecosystems. The 'One Health' approach recognises that the health of humans, domestic and wild animals, plants, and the wider environment, including ecosystems, are closely interlinked and interdependent. It is therefore appropriate to lay down that environmental due diligence should encompass avoiding environmental degradation that results in adverse health effects such as epidemics, and to respect the right to a clean, healthy and sustainable environment. In respect to the G7 commitment to acknowledge the rapid rise in antimicrobial resistance (AMR) at the global scale, it is necessary to promote the prudent and responsible use of antibiotics in human and veterinary medicines.”

Conflict-affected and high-risk areas: “In conflict-affected and high-risk areas, companies run an increased risk to be involved in severe human rights’ abuses. In these areas, companies should therefore undertake heightened, conflict- sensitive due diligence, in order to address these heightened risks and to ensure that they do not facilitate, finance, exacerbate or otherwise negatively impact the conflict or contribute to violations of international human rights law or international humanitarian law in conflict-affected or high-risk areas. Heightened due diligence includes complementing the standard due diligence with a thorough conflict analysis, based on meaningful and conflict-sensitive stakeholder engagement and aimed at ensuring an understanding of the root causes, triggers and parties driving the conflict and the impact of the company’s business activities on the conflict. In situations of armed conflict and/or military occupation, companies should respect the obligations and standards identified in International Humanitarian Law (IHL) and International Criminal Law (ICL) standards. Companies should follow guidance provided by relevant international bodies, including the International Committee of the Red Cross and the UNDP."

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