The term due diligence, commonly used to indicate the verification activity that is carried out before major Corporate transactions (such as mergers or acquisitions) or the conclusion of contracts, taken on in the Directive, embraces Sustainability. It is imposed on Companies in relation to their own Sustainability targets.
Big Companies operating in the European market will have to prevent, detect, mitigate, stop and repair the negative impacts on human rights and environment arising from their own activities as well as those of their suppliers and “trading partners”, located upstream (for example raw material extraction) and downstream (for example distribution, transport of the product).
In this sense, a “duty of vigilance” is imposed, said as the duty to put into place all the “appropriate measures” to achieve the objectives of respect for human rights and the environment. It is stressed that specific actions are not required to guarantee that these negative impacts will never occur, but Companies must demonstrate that they have done everything reasonably possible to achieve this result. In other words, the duty of care is an obligation of means.
Waiting for future guidelines from the European Commission clarifying how and by which practical measures Companies will have to comply, one point is already clear and represents the real news of the Directive: the duty of care is governed by a powerful system of sanctions, which is clearly inspired by the well-known system for protecting competition.
Member States are in fact required to have an effective private enforcement system, that is a liability for damages of Companies which, by willfully or negligently violating the obligations laid down in the Directive, cause damage to the environment or human rights. On the model of the competition law, there is also a specific recognition of Associations and NGOs representing broad interests (for example environmental associations).
In the months to follow, many other aspects of the directive will be examined and clarified (especially the criminal sanctions system and the control bodies), but it is already clear that sustainability is no longer exclusively an asset of “soft law” coming from a voluntary wish for reasons of reputation and competitiveness, but it is a real legal matter whose violation can be significantly sanctioned.
It is therefore essential to help Companies understand the benefits as well as the right ways of implementation and then work on preparing and adapting. AISEC – within ASviS – could promote, therefore, forms of collective fulfillment to the obligations of due diligence, to facilitate its respect especially by the SMEs that constitute the great part of the Italian Industries. We know that clarity on ESG principles always gives the market certainty about rights, clarifying what is expected from Companies, especially in social and human rights protection.
