Judicial analysis specifies the planned corporate social responsibility act in Finland
The analysis outlines the nature of the due diligence obligations that could be imposed on companies within a legislative framework in Finland. Due diligence refers to the obligation of a company to operate in a way that prevents the realisation of a human rights or environmental risk.
The legal analysis was prepared by Ernst & Young Oy on a commission by the Ministry of Economic Affairs and Employment. It explores possible regulatory options, their scope of application, supervision and sanctions under corporate social responsibility legislation. An analysis of corporate social responsibility regulation in the European Union and some other countries provides a backdrop for the report.
Focus on the principle of due diligence
The principle of due diligence aims to prevent any adverse impact on the realisation of human rights or the environment. In summary, due diligence means that the company engages in several processes that enable
- the identification of
- prevention of
- monitoring of results of, and
- information on adverse impacts.
In addition, due diligence exercised by a company must be:
- preventive,
- situation-specific,
- risk-based,
- a continuous process.
According to the analysis, business operations are already subject to various due diligence obligations, which require companies to assess and prevent risks associated with their operations. It would be possible to impose a duty of due diligence on companies regarding the environment and human rights within the framework of the national legal system. However, there are a number of issues, which are well analysed in the report, that need to be considered in the legislation.
An English translation of the study will be published in August-September.
Consultation round to begin on 30 June
The Ministry of Economic Affairs and Employment will organise a consultation round on the content of the report, which will be open to all. The deadline for comments will be 30 September, after which the Ministry will review the comments received. Further preparation will be decided separately.
The Ministry organised a hearing of stakeholders during the preparation of the analysis. A steering group involving the relevant ministries has guided the preparation of the analysis.
Inquiries:
Liisa Huhtala, Head of Business and Single Market Unit, Ministry of Economic Affairs and Employment, tel. +358 295 047 062
Linda Piirto, Senior Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 047 028
Sami Teräväinen, Senior Officer for Legal Affairs, Ministry of Economic Affairs and Employment, tel. +358 295 060 088