New Dutch draft law on due diligence

New Dutch Bill for Responsible and Sustainable International Business Conduct

Four political parties submitted a bill on human rights and environmental due diligence in Dutch parliament. This Dutch Bill for Responsible and Sustainable International Business Conduct follows and proposes to replace the Child Labour Due Diligence Act that was adopted by the Dutch Parliament in 2019 but has not entered into force yet. The law imposes a duty of care to prevent negative impacts on human rights and the environment – including the climate – on all companies in all economic sectors – including the financial sector – that are registered in the Netherlands or sell products or services on the Dutch market. The bill’s explanatory note explicitly states that this duty applies “regardless of where the activities take place and the local legal context” and also covers “adverse human rights impacts that are directly linked to the company’s activities, products or services through business relationships”.  The draft law furthermore imposes a due diligence obligation on all companies that exceed at least two of three threshold criteria: an employee base of at least 250 employees, a total balance sheet value of more than 20 million euros, and a net turnover of more than 40 million euros. This means the bill also applies to so-called ‘letterbox companies’, such as large multinational enterprises that are headquartered in the Netherlands only on paper. A broad movement of civil society organisations, trade unions, progressive businesses, religious organisations and academics has been campaigning for adoption of the bill, and will continue doing so in the coming months.

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