There is growing momentum worldwide to require companies to undertake human rights due diligence. As we enter 2022, we want to share these upcoming developments with you:
1. US Uyghur Forced Labour Prevention Act
The Uyghur Forced Labour Prevention Act will take effect in June 2022 and will impact all companies that do business in the USA.
As of June, US Customs and Border Protection (CBP) will presume that all goods mined, produced, or manufactured in China’s Xinjian Uyghur Autonomous Region (XUAR) have been made using forced labour. The CBP will prevent the import of all goods that can be linked to the XUAR, regardless of where the finished product is made. Companies are liable to have shipments blocked and be fined if they fail to comply. Read our analysis here.
2. The EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence
In 2021 the EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence was announced. The directive will require companies that operate in the European market to conduct ongoing due diligence of their supply chains in order to respect human rights and reduce their environmental impact.
We anticipate that the directive will be approved in 2022 and come into effect in 2023. [1]
3. The German Supply Chain Due Diligence Act
The Supply Chain Due Diligence Act was signed into law last year.
As of January 1st 2023 companies with at least 3,000 employees that have their head office in Germany, or operate a branch with a minimum of 3,000 employees in the country, will be required to conduct supply chain due diligence. From January 1st 2024 the threshold will be reduced to 1,000 employees.
The act will require companies to ‘identify, assess, prevent, and remedy’ human rights and environmental abuses in their operations. If a company does not comply with the law, they may be fined up to 2% of their global turnover, and be excluded from winning public contracts in Germany for up to three years. [2] See our analysis here.
4. The Norwegian Transparency Act
The Norwegian Transparency Act will take effect on July 1st, 2022.
The act will require an estimated 8,800 companies to conduct human rights and decent work due diligence in both their supply chains and operations.
Under this law, Norwegian citizens will be entitled to request information from large and mid-size companies on how they are addressing their human rights impact. Both the company and ‘responsible persons’ in it may be fined for non-compliance. [3] See our analysis here.
5. The Dutch Child Labour Due Diligence Law
The Dutch Child Labour Due Diligence Law is expected to take effect in mid-2022.
This legislation will apply to companies that sell or supply goods and services to Dutch consumers, regardless of where they are registered.
The Law requires companies to conduct due diligence on the goods and services they sell to determine if they have been produced by child labour. There will be significant fines and criminal penalties for non-compliance. [4]
6. Canadian supply chain regulation
In December 2021, the Canadian government stated their intent to introduce legislation that will eradicate forced labour from Canadian supply chains. We anticipate that more details will be released later this year. [5]
7. UK Modern Slavery Act reforms
The UK Government has announced new measures to ensure that British organisations are not contributing to, or benefiting from, the abuse of Uyghur Muslims in China’s XUAR. The government will review which UK products can be exported to Xinjiang.
The new measures will also introduce financial penalties for businesses that fail to comply with the 2015 Modern Slavery Act. Furthermore, they will provide support for UK public bodies to exclude businesses that are complicit in human rights violations from their supply chains. [6]
Action
The direction of travel is clear, companies need to start conducting human rights due diligence of their operations and supply chains. Failure to do so will increase legal, reputational and operational risk. Please contact us if you require guidance or support.
References
[1] The European Due Diligence Act
[3] CMS
[4] Human Rights Hub
[6] UK Government Press Release
