Other normative instruments of Due Diligence

Due diligence: a normative reality in the Human Rights and Business Agenda

Author: Ana Laura Figueiredo


In this new blog series, we are going to address the due diligence instrument, incorporated by the UN Guiding Principles, and some norms approved or under discussion, that have become a reference for the study of the theme and seek to transform its application. We will analyze the French Vigilance Law (Loi de vigilance), the European Union (Directive on Corporate Sustainability Due Diligence), the German Due Diligence Law (Act on Corporate Due Diligence Obligations in Supply Chains), and, lastly, other normative instruments that do not deal exclusively with due diligence, such as the Brazilian Bill 572/2022, which has already been a topic in another series where we explain the National Agenda and its construction process.

Bill 572/2022

Bill 572/2022 has already been analyzed in another blog series about the National Agenda, in which we emphasize that its elaboration took place through a participatory democratic process and that, as it is still in the process of analysis to be voted on, it has a civil society campaign for the approval entitled “This land has a law – Rights for the people, obligations for the companies”.

Its text was constructed from a Homa study with the support of the Friedrich Ebert Brazil Foundation and with the collaboration of several civil society organizations such as CUT, MAB, and Amigos da Terra Brasil, as well as other social movements and parliamentarians.

With regard to the institute of due diligence, the second chapter establishes the obligations of companies and the State, and the idea of mitigating risks and impacts by companies, which was introduced by the guiding principles, is replaced by the obligation to respect and not violate. The guarantee of full reparation, based on the jurisprudence of the Inter-American Court of Human Rights, is ensured as a mechanism for overcoming corporate social responsibility, thus, self-monitoring is also left aside and greater inspection power is granted to unions, which demonstrates a deepening and expansion in this aspect that was previously governed only by due diligence.

From this, it can be said that the project was able to overcome the weaknesses of the institute, which were already pointed out in the first post and better elucidated throughout the series analysis of due diligence laws. Thus, the normative instrument demonstrates its breadth and regulatory capacity, which, however, depends on its approval without significant amendments to the text, something that will demand great mobilization from civil society and political strength during the legislative process. It should be noted that the law will be applied to all companies that do not fall into the category of micro or small companies.

To illustrate what has been said, here are two provisions of Bill 572/2022 that cite due diligence and try to expand its application and overcome the exclusivity of self-monitoring.

“Art. 7th. Companies must carry out a due diligence process to identify, prevent, monitor and remedy violations of human rights, including social, labor and environmental rights, and must, at a minimum:

I – Cover those that the company can cause or to which it can contribute, through its own activities, or that are directly related to its activities and operations, products or services through its commercial relationships;

II – Be continuous, recognizing that the risks of violating human rights may change over time, as its activities and operations developed and the company’s operational context;”

“Art. 9th. item XVIII – Prevent the monitoring of business activity by the companies themselves from replacing their inspection by the State, with regard to security measures, preventive measures against the occurrence of disasters and serious accidents at work, compliance with environmental legislation, as well as any other related to the fundamental guarantees of protection of Human Rights in all their dimensions;”

UK Modern Slavery Act

The Modern Slavery Act, passed in 2015 by the British Parliament, determines that companies with revenues above 42 million euros must issue annual reports that prove actions against slavery and human trafficking in their businesses and supply chain.

However, the regulation only provides for possible contents of the reports, such as the assessment of the risk of slavery and human trafficking, monitoring and management, not proving to be effective in practice since several cases have been publicized since its adoption, especially during the Covid-19 pandemic, and no sanctions or accountability measures were taken.

A survey carried out by the Business & Human Rights Resources Center in 2021 showed that only 60% of companies produce reports in accordance with the law and that in the six years analyzed no sanctions or penalties were imposed on companies that did not comply with the duty to present a report, which proves the lack of coerciveness and measures to ensure compliance, even if it is just reporting and carrying out due diligence in supply chains.

Along with this, the results reflect the insufficiency of regulations that encourage willingness and low adherence by companies to comply with certain requirements, which in the concrete facts are not capable of effectively reducing human rights violations in work environments. Another criticism of the law concerns the fact that companies can be attested as compliant even if the company’s report attests to the lack of measures to face the risks of working conditions analogous to slavery or human trafficking, since the minimum requirements of the law are the publication of an opinion on the company’s website that is signed by a director and approved by the board.

Dutch Child Labor Due Diligence Act

The law, which entered into force on January 1, 2020, unlike the normative instruments analyzed, deals only with due diligence. However, its content does not cover matters of the environment and all human rights, being restricted to the protection of children and adolescents with regard to child labor.

Thus, the regulation determines that all Dutch companies must carry out due diligence of the production chains and attest to the non-use of child labor, with the chairman of the board of directors being responsible for verifying.

To define child labor, it adopts as a parameter ILO Conventions 138 and 182 on minimum age at work and on the worst forms of child labor. As for companies located in non-signatory States, the law establishes criteria and considers child labor as that performed by children or adolescents of compulsory school attendance age or, if not, minors under 15 years of age in activities that are incompatible with their age.

In the event of non-compliance with the duty of due diligence, Dutch law provides for administrative fines as sanctions, in addition to the criminal liability of directors for violating the Economic Crimes Act in case of recurrence.

In the next post, the last of the series, we will continue the analysis of regulations on due diligence in the field of human rights, focusing on the German Law of Due Diligence (Act on Corporate Due Diligence Obligations in Supply Chains), which is directly linked to the new Homa project which is the development of the research “Repercussions of the German Due Diligence Law in Brazil”. In this way, we will bring a brief analysis of its application and its limits, in addition to a concrete case to elucidate the analyzed themes.


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