On April 29, 2020, the European Commissioner for Justice, Didier Reynders, announced that the European Union plans to develop a legislative proposal by 2021 requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains. He further indicated that the draft law, once developed, is likely to be cross-sectoral and provide for sanctions in the event of non-compliance.

This announcement [...] comes in the same month as a call by 101 institutional investors [...] for governments to introduce mandatory human rights due diligence laws, and follows the publication of a wide-reaching study commissioned by the EC examining due diligence requirements through the supply chain...

[T]he study ultimately concludes that the introduction of mandatory due diligence requirements would yield the greatest positive impact... A key emphasis [...] was that any new law ought to be cross-sectoral and applicable to all businesses... Based on the Commissioner for Justice’s comments, it would appear the EC is inclined to follow these findings...

Crucially, the “mandatory due diligence requirement” option considered by the study would involve a legal mechanism which imposes a “legal standard of care”, meaning due diligence carried out by a business would need to be objectively sufficient in order to discharge its duty...