Human rights and environmental due diligence (HREDD) are gaining importance in global supply chains and are increasingly embedded in European and national laws or international trade agreements.
Pursuant to the definition provided by the OECD Guidelines for Responsible Business Conduct, due diligence is “a continuous process to help enterprises identify risks relating to human rights, labour rights and the environment with a view to ending, preventing or mitigating those risks”.
Due diligence is a process that helps companies understand and manage the human rights and environmental impacts of their operations and business relationships. The process consists of six steps:
The purpose of due diligence is first and foremost to avoid causing or contributing to adverse impacts on people, the environment and society, and to seek to prevent adverse impacts directly linked to operations, products or services through business relationships. When involvement in adverse impacts cannot be avoided, due diligence should enable enterprises to mitigate them, prevent their recurrence and, where relevant, remediate them.
The UN Guiding Principles on Business and Human Rights (UNGPs) state that both governments and companies have the responsibility to prevent and address negative impacts of business activities on people and the environment.
Due diligence legislation in several countries across the globe is driving purchasing companies to develop more responsible business practices and implement due diligence processes both in their operations and in their supply chains.
