Effects of the Recent Changes in Due Diligence and Labor Law Legislations on Global Production and Consumption: The New German Due Diligence Act Leading the Way for the European Union into a Sustainable Future

Abstract

Buying the cheapest product on the market is often the goal when deciding on a purchase. This has the consequence of companies pushing product prices lower and finding ways to save money during their production process. Generally, this does not sound like a problem, but when these companies decide to put workers in harm’s way and pollute the environment it becomes one. The new due diligence directives implemented in Germany and France and proposed in the European Union aim to put a stop to those practices. The proposal of those laws follows the implementation of the UN 2030 Sustainable Development Goals and focuses on transparency and business activities along the supply chain. This paper is going to analyze due diligence and the suspected change that comes with the implementation of these laws. Furthermore, to conclude on the economic impact of the proposed directive exploitation tactics, pricing strategies and consumer behavior are investigated. It has been published that many big companies are violating human rights or polluting the environment to gain competitive advantage. To adjust to the new directive companies will need to address these violations and eradicate them from their operations. The paper demonstrates ways of implementing green activities in companies’ business processes, in order to establish the change eventually affecting the enterprises operations and consumer behavior. Circular Economy and Operational Learning are important in the implementation process, to successfully create new and green business activity. Consumers are identified as a big part of the process and thus need to be considered as a party in sustainable development. The general finding is that cooperation and synergy need to be created by all parties involved to successfully move forward. The goal should be to create a sustainable environment for everyone. The due diligence directives are important steps towards reaching this goal and thus significant for the future economy. The economy will experience some shifts, but a new equilibrium will be established, if consumers as well recognize their due diligence.