"Non-paper - Mandatory due diligence: Building blocks for effective and ambitious European due diligence legislation", 5 Nov 2021

Dutch evaluations have shown that although voluntary measures make a valuable contribution, they have been insufficiently effective at making global value chains more sustainable. The Netherlands therefore takes the position that human rights and environmental due diligence legislation – preferably at EU level – is needed. With this non-paper, The Netherlands sets out how this could be enacted at EU level in order to generate maximum positive impact in third countries while safeguarding a level playing field for EU companies...

The building blocks for due diligence legislation cover the scope, the requirements and the enforcement...

The Netherlands advocates that EU due diligence legislation cover all large companies and listed SMEs in line with the definition set in the EU Accounting Directive (2013/34/EU). In addition, The Netherlands favours including medium-sized companies in high risk sectors within the scope... Besides companies domiciled in the EU, the legislation should also cover companies domiciled outside the EU that sell goods or services on the EU market...

The Netherlands favours the introduction of a statutory, general duty of care for all companies. A statutory, general duty of care sets out that every company has a duty of care to respect human rights and the environment in the value chain. Unlike the specific requirements outlined below, the general duty of care would not be enforced through administrative law. A statutory, general duty of care makes clear that the business community has a duty of care, even in the absence of specific due diligence requirements. The statutory, general duty of care has the nature of a safety net provision and should therefore be formulated in general terms. If a case is brought against a company, a civil court would have to establish whether the company in question has indeed violated its duty of care under the specific circumstances of the case, and whether the company should therefore provide remedy for harm that has occurred as a result...

The Netherlands believes that administrative enforcement of EU due diligence legislation is the most suitable... Obviously, it remains important that the regulatory body is also empowered to impose sanctions in the event of violations.

In order to safeguard the level playing field within the Union, is it crucial that the due diligence obligation is enforced uniformly in all Member States...

A European smart mix of policy measures, preferably by means of an EU Action Plan, would support the coherent implementation of the OECD guidelines and the UNGPs...