The importance of corporate behaviour in the climate transition and to reach a sustainable development has led to increasing requirements on responsible business conduct and an ongoing shift towards more binding rules relating to sustainability. According to a proposal for a new EU directive, companies will be required to carry out due diligence regarding sustainability. The main features of the proposal have been described here. In this series of articles, Cederquist’s Corporate Sustainability specialists describe the due diligence measures to be taken according to the proposed directive and existing international standards in the area.
In this context, due diligence refers to the process that companies should undertake to identify, address, and disclose risks and adverse impacts on the environment and human rights related to their operations and value chains. In the proposed directive, the due diligence process is based on the six steps set out in the OECD Due Diligence Guidance for Responsible Business Conduct, namely that companies should: (i) embed responsible business conduct into policies and management systems, (ii) identify and assess actual and potential adverse impacts, (iii) cease, prevent or mitigate adverse impacts, (iv) track implementation and results, (v) communicate how impacts are addressed and (vi) provide for or cooperate in remediation of adverse impacts.