Definition of “Supply chain due diligence”
The concept of “(supply-chain) due diligence” was first introduced in the United Nations Guiding Principles on Business and Human Rights” (UNGP), a non-binding international instrument endorsed by the UN Human Rights Council in June 2011.
Following the UNGP, numerous instruments, policies, and legal frameworks imposing “supply chain due diligence” responsibilities with similar substance have been developed, adopted, and implemented by both intergovernmental organizations and countries/regions worldwide.
Neither the UNGP nor subsequent instruments provide a precise definition of “supply chain due diligence”. However, based on their descriptions and interpretations, the concept may be generally understood as follows:
“Supply chain due diligence refers to the responsibility of enterprises to identify, prevent, mitigate, and account for actual and potential adverse impacts on human rights, the environment, and other relevant aspects arising from their business activities and across their entire supply chains.”.
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The term “due diligence” From a legal perspective, the term “due diligence” originates from contract law and tort law, with two commonly understood interpretations: - Firstly, “duty of care” viewed as a “standard of conduct,” under which the party owing “due diligence” must exercise a minimum level of care in their actions so as not to cause adverse impacts on others. For example, a person burning leaves in their garden has a duty to choose a low-wind day and control the fire to prevent it from spreading to a neighbor’s property. - Secondly, “obligation of behavior” viewed as a type of legal obligation concerning the manner of performance, distinguished from an obligation of result. For instance, a doctor treating a seriously ill patient has the duty to act diligently, using all their skills to treat the patient (obligation of behavior), but is not required to guarantee a cure (obligation of result). Based on these characteristics, “due diligence” is used in supply chain law to denote a core responsibility of enterprises to exercise diligence in monitoring and mitigating risks of violations of specific standards (such as human rights, environmental protection, anti-corruption) throughout their business operations. “Due diligence” does not require enterprises to guarantee that their supply chains will be entirely free from any risk or adverse impact on people or the environment… Source: Compiled by the TTWTO-VCCI Research Group |
Source: Compiled by the TTWTO-VCCI Research Group