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31 Jan 2024 by lbigmr

Project start: Study on audits and certifications in supply chains

The Ludwig Boltzmann Institute of Fundamental and Human Rights and the Institute for Sustainability, Business Law and Reporting of the University of Cologne conduct joint research into corporate due diligence.

The draft of the new Corporate Sustainability Due Diligence Directive (CSDDD) of the European Union (EU), in public reporting misleadingly referred to as the “Supply Chain Act”, will establish both human rights and environmental due diligence obligations for companies in their entire value chains. The draft in this regard is based on a cross-industry corporate due diligence obligation and emphasises the responsibility of the companies concerned to respect the environment and human rights in their economic activities and therefore to think about the economy, ecology and social issues together in terms of the sustainability triad.

The aim of the research project, which is financially supported by the Austrian Federal Chamber of Labour (AK), is to develop the content of an independent study on the human rights and environmental aspects of audit and certification systems in the context of corporate due diligence obligations. The Ludwig Boltzmann Institute of Fundamental and Human Rights (LBI-GMR) was able to win the Institute for Sustainability, Business Law and Reporting (INUR) of the University of Cologne for a joint realisation of the research project. The INUR will contribute its strong expertise in civil law, especially corporate law.

As part of the research work, the scientists want to find out how audits and certifications can help companies affected by the CSDDD to identify, eliminate, avoid or minimise the negative impact of their activities on the environment and/or human rights. This also applies to the activities of your subsidiaries or other parties involved in your value chains. Audits are test reports that result from a systematic, independent and documented examination of products, services or processes. Certifications, in turn, are proof of the conformity of a test object with previously defined criteria.

It has not yet been clarified whether existing audit and certification systems in individual sectors are even capable of checking compliance with environmental and human rights due diligence obligations or whether they would have to be reconfigured for such a task. In order to answer this question, the requirements placed on companies are first analysed:

  • What does it mean when companies have to fulfil a (risk-based) duty of care with regard to human rights and environmental requirements?
  • How far does their responsibility extend?
  • Can the companies affected by the planned directive be prosecuted if environmental damage and/or negative effects on human rights occur in their value chain?
  • What is a „value chain“?

After dealing with these and other relevant (preliminary) questions, it will be clarified what role audits and certifications can play in the context of corporate due diligence and whether they can be used to support it.