The European Parliament has adopted a report under the legislative initiative procedure, which calls on the European Union to urgently adopt a law which would ensure that companies are held accountable when they harm or contribute to harming human rights, the environment and good governance in a member country.
Enterprises accessing the EU internal market (including those based outside the EU) will have to prove that their companies comply with due diligence requirements regarding environmental and human rights.
The new law will require to implement due diligence by companies to identify flaws in adopted value chain (e.g., direct or indirect business, investment relationships) that could or do violate, for example, human rights (including social rights, trade union and labor rights), or environmental issues (contributing to climate change, etc.).
The introduction of this right is intended to allow victims to pursue claims for damages caused by a company more easily by suing under EU law.
Accordingly, companies should begin an analysis to identify any areas requiring due diligence on their part in the above regard.