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UC Law Business Journal

Abstract

In recent years several European states have enacted human rights due diligence laws, culminating in the imminent EU-wide Corporate Sustainability Due Diligence Directive.

This article provides a comprehensive analysis of these laws and explores their potential impact on U.S. businesses. Human rights due diligence emerges from the United Nations Guiding Principles on Business and Human Rights (2011) and was originally conceived as a voluntary means by which corporations could demonstrate that they proactively monitor and manage potential human rights abuses within their corporate group and supply chains. Since 2017, European states have begun enacting binding human rights due diligence laws. These laws are innately extraterritorial in nature, designed to ensure that corporations that operate in the European market comply with human rights standards throughout their value chain, including through their suppliers and business partners. The emergence of European due diligence laws will thus impact U.S. businesses and industries: an estimated 10,000 U.S. businesses will be directly affected, and far more will have to comply as a result of supplying or partnering with EU-based firms. The effect on U.S. business could be dramatic, particularly with major divergences between the EU and United States in relation to labor law and other legal regimes. The article analyzes how U.S. businesses will be affected, what businesses may need to do, and how divergent legal regimes may be addressed. It further discusses options for the U.S. Government to take a proactive approach to the European incursion on U.S. law and business in the interest of protecting rights while providing business certainty.

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