In its answer to the European Parliament, the European Commission explains the concept of the ‘value chain’ as used in the proposal on Corporate Sustainability Due Diligence. The Commission was also asked to justify why companies responsible for value chains should be responsible for operations downstream.
The European Commission clarified that “the concept of ‘value chain’ as put forward in the Commission’s proposal on Corporate Sustainability Due Diligence goes beyond the ‘supply chain’. Upstream, it also includes activities that are not strictly an input for the production of goods or the provision of services. Downstream, it includes the use and disposal of products.
The ‘use’ phase covers impacts of the product itself that arise through regular use. The company has to address possible adverse impacts in the business relationship or related to the product.
The proposal’s ‘value chain’ concept allows to comprehensively cover human rights and environmental impacts and reflects the company’s leverage as regards the prevention of harm in the upstream and downstream within established business relationships to which the due diligence obligations under the proposal are limited”.
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