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Dutch Follow Germans in Proposing Stricter Supply-Chain Law

The Dutch parliament is mulling a mandatory due diligence bill that would hold all corporations in the Netherlands accountable for human-rights and environmental abuses that occur in their supply chains, both within and outside the country.

The Bill for Responsible and Sustainable International Business, which was submitted by members of four political parties last week, places an emphasis on supplier nations by requiring “any enterprise that knows or can reasonably suspect that its activities may have negative impacts on human rights, labor rights or the environment in countries outside the Netherlands” to take measures that may be “reasonably required” of it to prevent such impacts, mitigate or reverse them “to the extent possible,” and, where necessary, enable remediation.

If the bill becomes law, companies would have to publish a policy document committing to conducting supply chain due diligence as “part of the regular business process.” Businesses would have to “identify and analyze” potential and actual risks of negative impacts in their own activities—“regardless of where the activities take place and the local legal context”—along with those of their business relationships. They would also be required to draw up and carry out action plans to prevent and mitigate any of those potential and actual negative impacts. Offenders, the bill added, would face fines under the Dutch Criminal Code.

Human rights, labor rights or the environment, the bill noted, are “negatively affected” if the value chain involves the restriction of freedom of association and collective bargaining, discrimination, forced labor, child labor, unsafe working conditions, slavery, exploitation and environmental damage.

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Dutch companies aside, the proposed Responsible and Sustainable International Business Conduct Act would apply to enterprises that conduct business in the Netherlands, have registered offices in the public bodies of Bonaire, Sint Eustatius and Saba or market products to the Dutch market.

“If an enterprise is unable to tackle all potential and actual negative impacts immediately, it prioritizes them based on their severity and likelihood,” the bill stated. “Once the most severe impacts have been identified and addressed, the enterprise will tackle the less severe negative impacts.”

The legislation builds upon a child-labor due diligence law that was adopted by the Netherlands in 2019 but is not yet in force. The bill recommends repealing the child labor “duty of care” legislation and instead incorporating it into this broader act.

The Dutch motion follows the German government’s agreement earlier this month to hammer out new legal regulations that could fine companies millions of euros for labor or environmental abuses that occur at any point in their supply chain.

“This law protects workers from exploitation across sprawling supply chains and protects human rights across the world,” Olaf Scholz, federal minister of finance, said in a statement. “In [the] future, it will be clear that ‘made in Germany’ also means respect for human rights.”

The European Parliament is also weighing legislation for environmental and human-rights due diligence that would increase European Union oversight of companies over their operations both within and outside the 27-country bloc.

“Existing international due diligence instruments have failed to provide victims of human rights and environmental adverse impacts with access to justice and remedies because of their non-judicial and voluntary nature,” a March 10 resolution noted. “The primary duty to protect human rights and provide access to justice lies with [member states], and the lack of public judicial mechanisms to hold undertakings liable for damages occurring in their value chains should not and cannot adequately be compensated by the development of private operational grievance mechanisms.”