The drive for mandatory corporate human rights due diligence accelerated in late 2020. The European Parliament Committee on Legal Affairs proposed a Draft Directive on Corporate Due Diligence and Corporate Accountability (“Draft Directive”) in September 2020. (Good summaries are available here and here.) Soon afterwards, the European Commission launched a consultation regarding sustainable corporate governance legislation concerning due diligence and fiduciary duty.

These developments hold great promise for business and stakeholders alike. Law can bring needed clarity and accountability to business respect for human rights, enabling more precise risk management, productive engagement, and a level playing field.

Those potential benefits, however, depend on legal certainty that the Draft Directive does not offer. The challenge lies in the uncertain legal meaning of core tenets of the Guiding Principles on Business and Human Rights, which were conceived to be voluntary and aspirational—not the source of criminal sanctions. While the Guiding Principles are invaluable as the beginning of law, they cannot be its end.

Targeted and sophisticated business engagement is urgently needed to shape a truly effective Directive and meaningful legislation. To advance such engagement, this deck summarizes (i) key elements of the Draft Directive; (ii) parameters of legal certainty under European law; (iii) three critical legal uncertainties inherited from the Guiding Principles; and (iv) practical recommendations to guide business engagement in the drafting process.