Context
Taking up this topic was already announced a year ago by European Commission President Ursula von der Leyen.
Subsequent regulations in the area of human rights and due diligence are part of a trend visible for some time that seeks to normalize the area of human rights accountability, with the CSDD as the leading regulation.
Draft regulation
The draft in its current form is based on the definition of forced labor contained in ILO (International Labor Organization) Convention No. 29 Concerning Forced or Compulsory Labor:
“For the purposes of this Convention, the expression “forced or compulsory labor” shall mean any work or services required of any person under the threat of any penalty and to which the person has not volunteered.”.
The core of the project is Article 3 in Chapter 1, the full content of which reads in its current, original form as follows:
“Economic operators shall not place or make available on the Union market products that are made with forced labor, nor shall they export such products.”
Where economic operator means any natural or legal person or association of persons who introduce or make available products on the EU market or export products.
The draft regulation proposes a series of control activities to be carried out by the relevant authorities of member states. Control activities for entities that may violate the assumptions presented in Article 3 will be based on an assessment of the risk of non-compliance based on relevant information available to member state authorities.
If member state authorities identify violations of Article 3, the draft provides:
- prohibiting the introduction or release of the products in question on the EU market and their export;
- Ordering the operators under investigation to withdraw from the Union market the relevant products that have already been introduced or made available on the market;
- Ordering the traders under investigation to divest the relevant products in accordance with national laws that are compatible with Union law.
In the next steps, the Draft will be discussed by the European Parliament and the Council of the European Union before it can enter into force. The draft adopted as a regulation will become effective 24 months after it enters into force.
Conclusions
The appearance on the legislative horizon of yet another regulation raising human rights due diligence issues sends a strong signal to business operators. In a scenario involving the entry into force of the CSDD and regulations such as those banning the sale of products made using forced labor in the EU, having functional due diligence procedures will become an integral part of doing business.
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