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The potential of contractual assurances to advance supply chain due diligence
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1028-3625
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EUI; RSC; Working Paper; 2023/28; Global Governance Programme
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BAAIJ, Jaap, CASTERMANS, Alex Geert, The potential of contractual assurances to advance supply chain due diligence, EUI, RSC, Working Paper, 2023/28, Global Governance Programme - https://hdl.handle.net/1814/75509
Abstract
On February 23, 2022, the European Commission’s adopted a proposal for a Directive on corporate
sustainability due diligence. The proposed Directive requires companies to make their supply chains
sustainable by obtaining contractual assurances from their suppliers. Noncompliance is met with
administrative sanctions and civil liability. In this contribution, we question the ability of contractual
assurances to sufficiently influence business conduct in the supply chain. Imposing sanctions and
civil liability do not resolve the difficulties that may, in practice, impede the control of supply chains
through contracts. Therefore, based on recent empirical research and existing general conditions
used by twelve multinational companies, we offer recommendations that can help companies manage
their supply chains contractually and thus contribute to the effectiveness of the proposed Directive.