On February 7, the Dutch Parliament adopted a bill that would require companies to conduct due diligence as to whether child labor is occurring in their own operations or in their supply chains.
The Dutch Senate is expected to review the bill in the coming months. If the bill is approved, further detail on the scope and applicability of the law’s requirements will likely be set forth through an administrative order.
As currently drafted, the law would not come into effect before January 1, 2020. At that point, companies would be required to file declarations within six months certifying that they have conducted the required due diligence.
Which companies are covered by the new legislation?
The proposed law is expected to cover companies that provide goods and services to Dutch consumers, including companies registered outside the Netherlands. Further definition of the scope of coverage, including the establishment of potential exemptions for smaller companies, will likely be provided through administrative order.
Companies that only supply goods or services acquired from companies that have filed due diligence declarations with the relevant supervisory authority will be exempted from having to file due diligence declarations themselves.
What, specifically, are companies required to do?
Companies subject to the legislation will be expected to investigate and determine whether there is reasonable suspicion that child labor contributed to the goods or services they are selling or supplying. If such a reasonable suspicion exists, then companies are required to create and engage in a “plan of action” to address their findings.
In conducting due diligence, companies will be expected to base their investigation on sources that are reasonably known and reliable. Further requirements for the investigation and the plan of action companies must undertake will be determined by administrative order. That said, companies should expect that due diligence expectations will be aligned with international guidelines, including the ILO-IOE Child Labour Guidance Tool for Business and the U.N. Guiding Principles on Business and Human Rights.
A supervisory authority will publish the declarations in a publicly available register.
What are potential penalties for failure to comply?
The bill provides that any stakeholder with concrete evidence that a company’s goods or services were produced with child labor will be able to submit a complaint to that company. If the issue is not resolved, the stakeholder will be able to submit the complaint to Dutch authorities.
Once a complaint is filed, the Dutch authorities may issue a legally-binding instruction ordering the company to conduct the required due diligence and make the appropriate declaration. If a company fails to do so, it will be subject to a modest fine. If a company repeatedly fails to make the required declaration, it could face criminal penalties and much more substantial fines.