Due Diligence Research Articles

Reflections on the interpretation and application of the due diligence obligation in international climate litigation: a comparative study of Daniel Billy et al. v. Australia and the COSIS advisory opinion

This article examines the interpretation and implementation of due diligence obligation in international climate litigation and advisory opinions, specifically by comparing Daniel Billy et al. v. Australia and the COSIS Advisory Opinion. It offers insights into the definition of due diligence obligation, the criteria for breach, and the remedies available under various legal frameworks. The due diligence obligation is not solely a direct duty under a specific treaty; it also imposes a positive obligation of conduct that must be evaluated within a broader legal framework. This method facilitates systemic integration. It facilitates the citation of pertinent regulations and precedents from different domains of international law during treaty interpretation. This approach promotes the harmonization and integration of various legal systems. The essay performs a comparative analysis of two cases. It analyses the implementation of the due diligence obligation in the realms of environmental and human rights protection. The emphasis is on the legal responsibility of States about climate change. The paper ultimately outlines the significance of the two instances for the future of international environmental law and the protection of human rights, highlighting the crucial role of due diligence responsibilities in combating climate change.

Navigating the Impact of Multinational Enterprises on Labor Rights: Barriers to Justice in Developing Countries

The rise of multinational enterprises (MNEs) presents both economic opportunities and significant challenges, particularly in developing countries. This essay examines the adverse effects of MNEs on labor markets in these regions, focusing on redressing corporate rights violations and the barriers to justice for affected workers. The legal frameworks in both host and home countries often fail to hold MNEs accountable due to weak regulatory mechanisms and the corporate veil doctrine. International regulations, such as the UN Guiding Principles on Business and Human Rights, provide some guidance but lack enforceability. Recent due diligence laws in Europe offer promising steps toward corporate accountability, yet they fall short by excluding meaningful participation from stakeholders in the Global South, whose socio-economic realities are crucial to addressing MNE-related issues. The essay advocates an integrated approach that involves Global South governments, civil society, and local communities in decision-making, risk assessments, and enforcement processes to ensure justice and equitable protection for affected workers.

Business angel groups as collective action: an examination of the due diligence process

With the emergence of business angel groups, angel investing is increasingly an activity that is based on collective action. However, our understanding of the investment process of business angels is largely based on studies of angels who invest independently. This paper investigates the collective action practices of one UK business angel group – Henley Business Angels. We examine how the due diligence process is undertaken. This stage involves the verification of the information in the pitch and business plan and underpins the decision whether or not to make an investment. This stage in the investment process has attracted limited attention by researchers. We find that there is a lack of rigour in the due diligence that angels undertake. Further, the process involves limited collective action. Group members largely act on their own behalf in carrying out due diligence, generally investigating areas of interest or concern independently of other members. However, members typically do share and discuss information gleaned from their own due diligence process with other members in the group. Some members will also accept the due diligence of other members if it is outside of their own area of expertise or if they do not have the time to carry out the due diligence themselves.

Climate tipping points: Tracing the limits of political discretion

Abstract States’ current emission policies are far from being aligned with what is needed to meet the Paris Agreement’s temperature goal. Against this backdrop, an increasing number of lawsuits have been filed around the world. As of March 2024, most courts have exercised restraint in imposing substantive limits on the legislator’s discretion in determining emission levels. Judicial restraint commonly rests on two premises: Climate models yield wide uncertainty ranges and choosing emission reduction levels is a normative decision belonging to the political domain. By engaging best available science on climate tipping points, this article examines the reasoning in favour of political discretion through a due diligence and equity lens. The analysis concludes that all factual requirements are met for states to be under an obligation to align their mitigation policies with a global carbon budget which is expected to limit global warming to 1.5°C at a likelihood as high as state capacities allow for.

Impact on Remedies of the Use of Corporate Governance Norms to Address Forced Labour

Forced labour, a pervasive issue within transnational production networks (TPNs), has been the subject of regulatory responses primarily centred around the use of corporate governance norms. These norms, whether through disclosure or due diligence laws, or in some common law countries, litigation seeking judicial recognition of a common law duty of care, are the sole legal mechanisms linking lead corporations to the working conditions in their TPNs. This article critically evaluates the potential of these corporate governance norms to provide effective remedies to forced labour workers, a topic of significant importance as it recognizes their agency rather than portraying them as passive victims.To this end, this article will appraise two legislative models, one implementing disclosure and the other due diligence, while examining the duty of care jurisprudential model, from the procedural and substantive criteria of effective remedies: the California Transparency in Supply Chains Act (CTSCA) disclosure regulation, the French vigilance law, and the Canadian common law duty of care. The analysis underlines a few, primarily procedural, improvements generated by disclosure and due diligence legislation, as well as the common law duty of care toward more effective remedies. These corporate governance norms increase available information and foster accessibility to some extent. However, substantive improvements brought by corporate governance norms are either constrained (France), hypothetical (Canada) or non-existent (California). Moreover, the corporate governance norms examined fail to provide effective judicial remedies for forced labour victims and may undermine potential lawsuits by providing corporations with a defence. We conclude with a discussion of the newly adopted German and Canadian laws.

The art of due diligence: Lessons learned from multimillion-dollar investment deals

This study explores the integral role of due diligence in multimillion-dollar investment transactions, specifically focusing on mergers and acquisitions. The research aims to elucidate how due diligence practices have evolved from traditional, checklist-based assessments to complex, multi-dimensional analyses encompassing financial, operational, and strategic considerations. This evolution reflects the increasing need for comprehensive risk management tools that enhance decision-making and safeguard investments against unforeseen challenges. The study employs a qualitative approach, examining various case studies and literature to reveal the impact of due diligence on investment outcomes and the critical elements that contribute to its effectiveness. Key findings indicate that effective due diligence practices not only mitigate risks but also facilitate post-merger integration and create value by identifying potential synergies. The incorporation of environmental, social, and governance (ESG) criteria, along with advanced technologies like artificial intelligence and data analytics, has further strengthened due diligence frameworks, enabling more precise and transparent evaluations. However, challenges remain, particularly in cross-border transactions where regulatory and cultural differences can complicate the process. The study concludes that due diligence must continuously adapt to address the demands of a dynamic investment environment. Recommendations include adopting proactive, technology-driven approaches to due diligence, integrating ESG assessments to meet stakeholder expectations, and enhancing cross-functional collaboration. This approach will enable investors to make informed, sustainable decisions aligned with long-term value creation.

Shifting boundaries: a transnational legal perspective on the EU Corporate Sustainability Due Diligence Directive

ABSTRACT Aiming to address harmful impacts of transnational business operations, legislation requiring companies to exercise human rights and environmental due diligence is on the rise in several jurisdictions. This article examines the EU Corporate Sustainability Due Diligence Directive (CSDDD) and its obligations on large companies domiciled or operating in the EU to cascade demands drawn from international soft law onto business partners, including those in third countries, as examples of transnational law. Emphasising the international law origin of the risk-based due diligence approach, it demonstrates that the CSDDD fits the understanding of transnational law as being public law, targeting private actors, concerned with human rights and the environment in the context of business operations, and inducing companies to advance the normative ideals drawn from international law through private forms of law targeting value chains operations. Moreover, it outlines implication for evolving transnational law theory to accommodate the proliferation of such laws.

Neonatal Jaundice Severity Detection from Skin Images using Deep Transfer Learning Techniques

Neonates in the initial weeks postpartum frequently experience jaundice, a prevalent medical condition characterized by the yellow discoloration of the sclera and integumentary surfaces. This phenomenon transpires as a result of the elevation of bilirubin concentrations within the circulatory system. When bilirubin levels reach critical thresholds, they present a considerable risk for severe complications, including neurological impairment, which represents one of the gravest outcomes that may ensue if the condition is not addressed with due diligence. This study investigates a non-invasive method for assessing jaundice severity in full-term infants from 1 to 29 days, focusing on infants in Mosul city. A dataset of 344 images was collected using an iPhone 12 Pro Max (9MP camera) at Ibn Al-Atheer Hospital, capturing various skin tones and lighting conditions to ensure accurate analysis. Advanced computer vision techniques were used to classify jaundice severity into three and four categories based on skin images. Pre-trained deep transfer learning models, namely VGG16 and ResNet50, were utilized for training, with the fully connected layer removed and a suitable classifier designed for each model. VGG16 achieved 91.71% accuracy for the three-category classification, while ResNet50 reached 95.98%. For the four-category classification, accuracies of 94.92% and 94.66% were achieved, respectively. These high accuracy levels suggest that non-invasive, image-based assessments can reduce the need for repeated blood tests. This research highlights the potential of using smartphone-based methods for jaundice screening in neonatal care, providing a reliable, accessible tool to reduce strain on medical facilities and improve early detection.

Acknowledging the role of loss in facilitating employee transition in a partial business acquisition

PurposeThe purpose of this paper is to explore the experience of a cohort of staff who transferred from a medium-sized Irish pharmaceutical company to a US multinational, while remaining in the same building as their original employers and colleagues. It highlights the role of acknowledging loss when facilitating employee transition and the co-development of a communication and integration strategy in transitioning to a new organisation.Design/methodology/approachAn exploratory qualitative case study captures the experiences of the senior manager responsible for the business unit transition and a cohort of 32 employees who moved to the US multinational. Conversations between the senior manager (author three) and his academic peers (authors one and two) trace the experience of this team as they transitioned to the new organisation.FindingsInsights are offered through the transition journey – from the unofficial partial-acquisition offer through to the due diligence period and onto the subsequent implementation of the communication and integration strategy. Findings exhibit a co-developed a communication and integration strategy, revealing a largely successful initial integration of the team into the new organisation.Originality/valueThe paper offers a first-hand account of the steps taken in a successful employee transition to a new organisation following a partial acquisition. It describes how acknowledging loss is a valuable first step in the transition process, enabled by the design and adoption of a co-created communication and integration strategy.

Professional Standards for Individuals Performing Independent Technical Functions in Construction

The appropriate level of construction-related services is guaranteed primarily by high requirements imposed on individuals performing these functions. Independent technical functions in construction may only be carried out by individuals with relevant technical education and professional experience, tailored to the type, degree, and complexity of the activity, and other requirements associated with the performed function, as confirmed by the decision granting construction qualifications issued by the professional self-government body. Individuals performing independent technical functions in construction are responsible for carrying out these functions under regulations and principles of technical knowledge. They are also accountable for due diligence in performing their work, proper organization, safety, and quality. The quality of performing these functions is subject to control by the professional self-government, of which the individual performing independent technical functions in construction is a member. This stems from the fundamental task of this self-government, which is to oversee the proper execution of these professions within the bounds of public interest and for its protection.

Displaced by the transition: The political ecology of climate change mitigation, displacements and Lithium extraction in Zimbabwe

Decarbonization initiatives depend heavily on the sustainable supply of critical raw materials. Such a high dependency on critical minerals drives their urgent sourcing. However, this urgent extraction of critical minerals for the low-carbon energy transition induces severe social impacts including different types of displacements: i.e physical, cultural and economic. Demand for critical minerals is expected to surge in the coming decades, and so are these displacement trends. Communities located on or nearer to critical minerals deposits are increasingly becoming exposed to these displacements, but there is limited problematization of such forced relocation trends that negatively impact communities, socio-economically and culturally. Detailed case studies of displacements induced by the haste to extract critical minerals are scant. The displacement problem is categorized under the “S” of the ESG risks, and it has not been adequately conceptualized- within the energy transitions field- to understand its full-scale. The “speed” to extract these minerals drives us to rethink mining induced displacement and resettlement (MIDR) by considering how this urgency may protract displacement impacts. Using the political ecology of climate change mitigation framework, this article analyses multidimensional displacements resulting from the accelerated extraction of critical minerals with special reference to the lithium case in Zimbabwe. In Zimbabwe, lithium extraction is inducing multidimensional displacements in some regions where it has been discovered. Evidence indicates that these displacements are implemented with no due diligence and in the absence of adequate processes of consultation and consent leaving communities impoverished. The paper provides recommendations for improving the resettlement practices and achieving resettlement with development that improves the lives of affected communities within the energy transition agenda.

MANAGING THE “S” IN ESG: HOW ASSET MANAGERS DISCLOSE AND CONSIDER HUMAN RIGHTS

Objective: The purpose of the research was to evaluate the commitment and due diligence measures directed at human rights in a sample of the largest international and European asset management companies, under OECD guidelines. Theoretical Framework: According to the OECD, companies can impact most internationally recognised human rights. However, there is a lack of studies that directly assess the human rights due diligence in investment companies. Method: A documentary and qualitative analysis of 45 investment companies was applied. Five key performance indicators were created to measure human rights commitment and due diligence practices such as disclosure of human rights policies, cascading of compliance/obligations to investees, due diligence before and during the investment and collaboration with industry and non-industry initiatives. All companies were classified and rated according to these criteria. Results and Discussion: This research reveals that there is a dichotomy between recommendations of human rights integration in investment and actual commitment and compliance, indicating that only a minority of companies were compliant and committed to considering human rights in their investment. Research Implications: The results provide an initial benchmark of the state of the commitment towards human rights in the investment sector, allowing for further investigations to be conducted to assess the development of this dimension of ESG and CSR, particularly in this sector Originality/Value: The analysis consisted of accessing and evaluating the public information of the larger investment firms from an individual investor perspective, which provides an innovative view of human rights awareness and compliance in the investment sector.

Environmental Impact Assessment System: Case Analysis of Existing Legal Disputes

Abstract: Environmental Impact Assessment (EIA) refers to the process of assessing the possible impact of planning activities on the environment. This paper contends that the current international legal framework does not adequately delineate the activation criteria for EIA and overlooks the significance of international collaborative duties that come into play when sovereign states embark on the initiation and execution of EIA processes. Only in relation to the general principles of international law can the nature of the EIAs obligation be comprehended. When dealing with cross-border damage, the requirement for due diligence is complemented by an implicit responsibility to collaborate. This latter obligation arises under identical situations as the due diligence requirement, particularly in response to 'the likelihood of significant environmental damage,' and thus, it needs to be satisfied by the national government under equivalent circumstances. This paper argues that the courts interpretation of environmental impact assessment is incomplete which is reflected in two aspects: (1) the ambiguity in the court's grasp of the EIA threshold's unpredictability. The International Court of Justice fails to clarify the criteria for establishing a 'substantial environmental risk'. (2) The court's oversight in considering the duty to collaborate could result in an overemphasis on the material aspects of EIA-treating it merely as a technical instrument. By reintegrating the cooperation duty, a more balanced perspective on the procedural elements of EIA could be achieved. Delving into strategies to rectify these two deficiencies and obtaining a holistic insight into the International Court of Justice's approach to EIA will yield substantial implications and relevance for future EIA-related endeavors.

Doing the right thing? The hotel industry's management of, and reporting on, modern slavery

Little is known about the hotel's response to increased legislation on the unethical practice of modern slavery in their operations and supply chains. We examine i) the extent, and quality, of the content of their disclosures and the managerial actions, ii) the communication efforts, through moral legitimacy appeals, and iii) the managerial and disclosure gaps influenced by the UK Modern Slavery Act. Substantive actions dominate. Hotels focus on their direct operations and Tier 1 suppliers, and on isolated risk assessments and due diligence. They omit the victims' perspectives and remedies. By disclosing procedures and structures, hotels demonstrate ‘reasonable effort’ as a proxy for effectiveness in eliminating modern slavery. We advance legitimacy theory, identifying different disclosure behaviors based on either symbolic or substantive actions. We propose two new appeals—Value-based and Personal—relevant to human rights. Reporting turns into a discursive device for moral legitimacy, with implications for policy and practice.

The Swiss Legislation on Business and Human Rights: A Reform Needed Towards Harmonization with EU Law

AbstractThis article examines the disparities between the (existing and planned) business and human rights (BHR) legislations in Switzerland and the European Union (EU). More specifically, (i) the key differences that exist between the Swiss and EU BHR legislations are identified, and (ii) the proposed amendments to the Swiss BHR legislation to reach the desired harmonization with the EU framework are put forward. The Swiss BHR legislation, implemented in stages on 1 January 2021 and 1 January 2023, encompasses provisions related to ‘transparency on non-financial matters’, ‘transparency in raw material companies’, and ‘due diligence and transparency in relation to minerals and metals from conflict-affected areas and child labor’. The EU BHR legal framework, however, has undergone a major overhaul, with the recent adoption of the Corporate Sustainability Reporting Directive (CSRD) and the Directive on Corporate Sustainability Due Diligence (CSDDD) that introduce additional obligations. These EU regulations have (or will have) important extraterritorial effects, including on Swiss undertakings operating—directly or indirectly—in the EU. To prevent Swiss companies from being subject to a diverse array of regulations (with an increased risk of sanctions in case of non-compliance), a reform of the Swiss BHR legislation is needed to ensure harmonization with EU BHR legislation. This article also serves as a resource if full equivalence between them is sought.

First report of aflatoxin and ochratoxin contamination in ginger collected from different agroclimatic zones from Punjab, Pakistan

Ginger, a fresh rhizome, an economically important spice with extensive nutraceutical activities finds itself in vegetable and therapeutic market. Aflatoxins (AFB1, AFB2, AFG1 and AFG2) along with ochratoxin A (OTA) are the most significant and the most toxic form of mycotoxins which are produced by various fungi. This study was initiated to assess the contamination of AFs and OTA in raw and dried ginger products, collected from different agro-climatic zones in Punjab, Pakistan employing the high performance liquid chromatography. We found all (raw ginger samples commercial ginger powders) samples contaminated with AFB1 (range: 29.88-1060.12μg/kg). AFB2 contamination was much lower (range: 0 to 17.54μg/kg). Variable contamination of AFG1 was also observed (range: 0 to 170.58μg/kg) whereas AFG2 contamination was found in only three (range: 0 to 21.88 μg/kg) out of 19 raw ginger samples. OTA contamination ranged from 0.05-3.42μg/kg. Ginger samples from lower altitudes (<1000 m) were more contaminated with AFB1 sub type mycotoxin. Keeping in view that the toxicity of AFs is in the order of B1>G1> B2>G2, it was alarming to find that 100% of the samples were contaminated with AFB1 way beyond the permissible limits. Our very first report about the contamination of ginger with AFs presents a grave health issue because of wide use of ginger. We conclude that ginger production in Pakistan needs to be carefully crafted and due diligence is needed during ginger cultivation, harvest and post-harvest operations because the amount of aflatoxins detected in this study are very much above the permissible limits. In this regard, ginger storage in cooler environments such as refrigerator should be encouraged to contain the AFs proliferation.

Through an Hourglass Darkly? Navigating The Risk Landscape of the Reasonably Foreseeable Future

Abstract As refugee law has developed over time, broad authoritative principles have been espoused as interpretive aids to the refugee definition. The maxim that a well-founded fear of being persecuted entails a forward-looking appraisal of risk is one example. In some jurisdictions, such as Australia, the temporal yardstick of the reasonably foreseeable future has been introduced to guide decision-makers over the complex terrain of risk assessment. However, a close study of the case law reveals formulaic use, inconsistency and conflation of the standard with risk and its indicia—and if the standard is intended as a real risk heuristic this is far from clear or warranted. This study critically examines the reasonably foreseeable future notion in case law in Australia, including its origins as an imported, limiting standard of due diligence from other areas of international law. It signals refugee law’s vulnerability to the standard and cautions against applying the gloss of foreseeability and reasonableness as an unnecessary and obscure overlay to interpretation. It recommends instead the unadulterated real chance standard paired with narrative conventions on time, as strategies adopted in other areas of law to sensibly navigate the fraught notion of foreseeability. It proposes that the ordering of the definitional elements of well-founded fear, downstream of being persecuted, is critical to the analysis and, in simple terms, slow and deliberate thinking is required to pinpoint the temporal underpinnings of harm in relation to risk.

The Paradox of Corporate Sustainability Due Diligence: Impact on the Financial Sector

In this article, the author examines the obligations imposed on companies, particularly financial undertakings, by two key regulatory initiatives: the Responsible and Sustainable International Business Conduct Act (RSIBCA) and the Corporate Sustainability Due Diligence Directive (CSDDD). Both frameworks aim to introduce hard law requirements for sustainability due diligence, covering human rights and environmental impacts. While the RSIBCA is still subject to political approval in the Netherlands, the CSDDD has been adopted and imposes binding obligations across the European Union after adoption by the Member States. The article highlights the key differences and similarities between these initiatives and their specific impact on regulated financial undertakings. Through fictional case scenarios, the article explores how financial undertakings must navigate the complexities of due diligence, climate transition plans and general duty of care under these rules.

Enhancing anti-corruption via investment arbitration: from red flags to due diligence

Abstract As the number of corruption allegations in investor–State disputes (ISDS) grows, tribunals must balance their duty to resolve disputes and to render enforceable awards. Given the difficulty of proving corruption, arbitrators increasingly consider red flags to detect it, but still struggle with drawing consequences for corrupt conduct that would serve as an effective deterrent. Our empirical analysis of 92 ISDS cases that involved allegations of corruption reveals that over a quarter of arbitral decisions already utilize a red flags approach, which helps tribunals assess corruption risks and provide circumstantial evidence. This article proposes a novel list of red flags based on the empirical analysis, domestic and international law sources as well as soft law instruments. It then frames a corresponding anti-corruption due diligence mechanism, which can minimize the risks of corruption occurring, bring more predictability to ISDS and disincentivize frivolous allegations of corruption.

Perceptions of the implementation of credit rating agency regulation in South Africa

Background: Credit rating agencies (CRA) played a key role in the global financial crises of 2007/2008 which led to the introduction of CRA regulation.Aim: Using Giddens’ theory of modernity as a framework, this article analyses experts’ perceptions of the implementation of the CRA regulation in South Africa.Setting: This article focussed on experts’ perceptions of CRA regulation in South Africa.Method: This qualitative article was conducted using detailed interviews with South African experts in the investing and credit rating industries. Interviews were conducted in 2013 and 2023. An interpretive approach was adopted to analyse the data into themes, providing insight into the perceptions relating to the introduction of CRA regulation in South Africa.Results: While the introduction of CRA regulation in South Africa is a mechanism used to legitimise the capital system and encourage foreign investment, its applicability, considering the size of the country’s CRA market, is contentious. Credit rating agencies’ current business model is prone to conflicts of interest and no viable alternatives are available. Consequently, investors need to exercise judgement over their investment decisions instead of outsourcing their due diligence requirements to CRA without careful consideration.Conclusion: Credit rating agencies’ regulation in South Africa has further cemented CRA’s position in financial markets in line with global trends in this industry.Contribution: This article will allow policymakers, market participants and researchers to understand the perceptions of the CRA regulation in South Africa from a social constructivist perspective.