GUIDES FOR POLICY MAKERS SERIESDue diligence.
Can managing adverse
impacts be simplified?
What is the issue?
Increased societal expectations for companies totake responsibility for their impacts have driven
organisations to become far more focused on due
diligence, the process through which an organization
identifies and assesses, prevents, mitigates, andaccounts for how it addresses its actual and potential
adverse impacts, including public communication.
National due diligence policies started to appear
over a decade ago, increasingly driven by pressure
from stakeholders to apply a due diligence lens not
only to their own company’s operations, but also intheir supply chains and other business relationships.
With the 2021 update, GRI has incorporated theglobally accepted principles of due diligence in its GRI
Standards, providing companies a framework and tool
to account for their impacts.
Initially, due diligence policies were largely focusedon addressing negative impacts on human rights.
However, this is increasingly being extended toenvironmental impacts as well - with environmental
issues being gradually entrenched in human rights atthe international, regional, and national level.

What does this mean for policy makers?
To ensure that businesses prevent, mitigate
and account for their impacts, including publiccommunication, policy makers should incorporate due
diligence into their legislation.
Around the globe, legislators and regulators areincreasingly obliged to consider how to embed andoperationalize due diligence expectations into policy.
As policy makers address this challenge, they often
turn to existing or emerging guidelines or regulatory
frameworks.
In 2011, the Human Rights Council adopted the United
Nations Guiding Principles on Business and HumanRights (UNGPs), which state that all companies havea responsibility to conduct human rights due diligence.
Subsequently, the Organisation for EconomicCooperation and Development (OECD) incorporated
the UNGPs into the OECD Guidelines for Multinational
Enterprises (OECD MNE Guidelines) and extended
its application to other areas beyond human rights.
The International Labour Organization (ILO) Tripartite
Declaration of Principles concerning Multinational
Enterprises and Social Policy was also updated in2017 to incorporate the UNGPs.
The UN Human Rights Council in October 2021 wenta step further and recognized that a clean, healthyand sustainable environment is a human right. InJuly 2022, this was confirmed by the United Nations
General Assembly adopting a resolution (A/76/L.75)
which recognized the right to a clean, healthy, andsustainable environment as a human right.

Within the EU, recent developments give these due
diligence guidelines ‘teeth’ such as the European
Commission’s proposed Corporate Sustainability
Due Diligence Directive (CSDDD), and the Corporate
Sustainability Reporting Directive (CSRD).
The EU CSDDD is a legislative framework to oblige

companies to demonstrate what action they are taking
to protect the environment and human rights. CSRD
which entered into force in January 2023 requires
companies to report on the impact of corporate
activities on the environment and society. The
disclosure requirements under the CSRD will apply toan estimated 50,000 companies, from January 2024.

How embedding the GRI Standards indue diligence policy can help
Regulations are vital ways to reinforce guidelines
such as the UNGPs and can encourage adherence
via sanctions. Public communication of due diligencepolicies and implementation to stakeholders are arequired step of due diligence. Businesses embarking
on the due diligence journey are significantly
benefited by a reporting framework that enables
them to operationalize and communicate on their duediligence.
Conceptually, reporting directly supports all the stepsof due diligence as it enables communicating what theorganizations’ impacts are; who their stakeholders are
and how they are engaged; how impacts are identified
and managed, etc. It provides evidence that steps ofthe due diligence have been effectively followed.
Due diligence reporting has been built into themodular structure of the GRI Standards andthe operated terminology has been aligned withintergovernmental authoritative instruments. For
example, the materiality assessment under the GRIStandards embeds the identification and assessment
step of due diligence in the UNGPs and OECD MNEGuidelines. The 2021 updates to the GRI Standards
give full effect to the due diligence process asarticulated in the OECD MNE Guidelines and theUNGPs. So, it is also worth noting that GRI standards,
the world’s most widely used sustainability reporting
standards, have a high degree of interoperability withboth CSDDD and the CSRD. A GRI paper on due
diligence and reporting gives more details on this.

73% of the world’s 250 largest companies by revenue
use GRI guidelines or standards for their sustainability
reporting and 67% of the top 100 companies byrevenue in 52 countries and jurisdictions use theGRI standards, as well as 86% of the world’s largest
100 banks. The GRI Standards are also currently
referenced or required in 259 policies in 85 countries.
The interoperability of GRI standards with the global
authoritative due diligence framework effectively
means that reporting organisations using GRI willdramatically ease the burden of the reporting process,cut costs and reduce complexity as they seek toadhere to their own country’s due diligence policies.

As due diligence gains more traction globally,national policy makers can be confident
that policies based on GRI standards willmore easily be adhered to by the manyorganisations that already report using GRIstandards. For more information, pleasecontact policy@globalreporting.org.

GRI would like to thank the Government of Sweden for their financial support to this publication.

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