There is increasing focus on whether a business is conducting its operations in a sustainable way, and without violating human rights (see Environmental pollution and climate change claims and Human rights claims). There are significant risks here, which will differ depending on the sector in which the business operates. These risks are relevant not only to the operations of the parent company but also to its subsidiaries and wider supply chain.
A series of recent cases, culminating in the Supreme Court decision of Vedanta (see our article here), have made it possible to hold a parent company to account in the English Court for the acts of its subsidiaries abroad. A series of mass tort claims have been launched in the English Court for harms conducted by subsidiaries of a UK parent company overseas. These include claims for environmental damage, use of child labour in the supply chain and human rights violations. Such litigation can cause significant financial and reputational harm for companies.
Those with lengthy supply chains will need to review their exposure, and ensure that proper due diligence is conducted down the line. As boohoo found to its cost when implementing a review in 2020 into the treatment of workers who make its clothes, the discovery of "supply chain malpractice" can be costly, significantly affecting reputation and sales, as well as share values.
Key contacts
If you have any questions, contact a member of the Liability for supply chains and subsidiaries team for assistance:
