Good intentions of EU legislations could have opposite effect

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There is a risk that the objectives of the EU’s due diligence legislation, i.e. where companies have a duty to address negative human rights and environmental impacts in their own operations, will be counter-productive. This is according to a new report by the National Board of Trade.

The EU’s obligations on companies to carry out due diligence in their operations are extensive. For example, they entail companies having to ensure that suppliers are complying with their due diligence obligations, which can involve gathering detailed information from their suppliers.

“The EU legislation is well-intentioned, but if suppliers are unable to fulfil the due diligence obligations of EU companies, there is risk that suppliers will say that they comply, even if that is not the case. The suppliers could also choose to sell their raw materials and products to other markets where the requirements are lower,” says Kim Larsson, Trade Policy Adviser at the National Board of Trade.

The new report contains recommendations to EU decision-makers and to EU companies and their suppliers.

Read the interview and download the report

Potential Impacts of EU Due Diligence Obligations on Companies’ Suppliers in Developing Countries