Italian risk managers must prepare for due diligence rules

Italy is lagging behind other leading European nations in the adoption of national laws to ensure that organisations are carrying out adequate due diligence on their own operations and supply chains, particularly in key areas such as the environment and workplace human rights. But Italian risk and insurance managers should not for a moment think they are going to somehow escape the managerial and administrative burden faced by peers in other European nations such as the UK, Germany and France. Italian is, of course, a leading member of the European Union and so will have to transpose coming directives such as the Corporate Sustainability Due Diligence Directive (CSDDD), the Greenwashing Directive and the Corporate Sustainability Reporting Directive (CSRD) into national law. It is not a question of if, but rather when and how. And the sooner members of Italian risk and insurance management association Anra are provided with guidance to help prepare, the better. A recent paper titled Supply chain due diligence in Italy: Legislation under construction released by Rödl & Partner – the German legal, accounting and tax advisory firm that supports German businesses in more than 50 countries worldwide, including Italy – says that Italian organisations cannot ignore the raft of new rules and regulations already in operation elsewhere across Europe and those that are coming from Brussels. “The public debate in recent years has been strongly focused on the need to introduce regulation of a due diligence process in the supply chain to prevent, mitigate and remediate violations of human rights [including modern forms of slavery and child labour] and to promote and uphold environmental standards, enabling companies to conduct responsible production activities and fair business practices,” explains the firm. “While at the EU level the publication (in 2024) of the Corporate Sustainability Due Diligence Directive is awaited, Italy has not yet adopted a specific law imposing a general regulatory obligation on companies to perform supply chain due diligence on human rights and the environment, unlike other European states,” it adds. “Nevertheless, in the ESG context, companies operating in Italy must keep in mind some specific European-derived obligations, both regarding due diligence for the supply of certain assets and regarding ESG reporting,” continues the firm. First, Italian companies need to be aware of Regulation (EU) 2017/821 (Conflict Minerals Regulation) – and the Legislative Decree 13/2021 that ensures implementation at national level. This establishes supply chain due diligence obligations for EU importers of tin, tantalum, tungsten and gold originating from conflict or high-risk areas, to ensure responsible and transparent sourcing. “The supply chain for these commodities is often unclear, and their extraction may take place using forced labour or other forms of modern slavery, also facilitating crimes such as corruption, money laundering, or the financing of armed groups. Therefore, pursuant to the Conflict Minerals Regulation – applicable as of January 1, 2021 – European importing companies [including those operating in Italy] are required to adopt systems and procedures to make sure they can identify, manage, and communicate actual and potential risks connected to the sourcing of these metals and minerals in order to avoid or mitigate their negative effects,” points out Rödl & Partner. Second, and more recently, Regulation (EU) 2023/1115 (Deforestation Regulation) was published. It establishes rules about placing and making available on the EU market certain raw materials – such as cattle, cocoa, coffee, oil palm, rubber, soybean and wood – as well as products containing, fed or made up of these raw materials, in order to curb deforestation and forest degradation caused by their consumption. The rules also apply to exports from the EU containing these materials. The Deforestation Regulation – applicable as of 30 December 2024 – imposes certain obligations on companies, as well as those from Italy. They must perform due diligence on all of these raw materials and relevant products to ensure they meet the expectations of no deforestation. Companies must also declare to the competent authorities, through an information system set up for this purpose, that due diligence has been carried out and that no risk, or only negligible risk, was found. The advisory firm points out that a similar due diligence obligation on the sourcing of raw materials has also been recently established in connection to batteries through Regulation (EU) 2023/1542 (Batteries Regulation). This introduced sustainability, safety, labelling, marking and information requirements for batteries in the EU. As of July 2025, all companies placing batteries on the EU market, except for SMEs, will have to develop, implement and conduct value chain due diligence to verify social and environmental risks in the battery life cycle. These due diligence policies will then have to undergo a third-party verification process and be audited periodically. Then, of course, there are the non-financial reporting obligations that apply in Italy too. “While not specifically introducing due diligence obligations, another relevant piece of legislation for companies operating in Italy to consider is Legislative Decree 254/2016 implementing Directive 2014/95/EU (Non-Financial Reporting Directive or NFRD),” says Rödl & Partner. This decree was introduced for large public interest entities. It requires these organisations to publish a non-financial declaration to report their strategy to “effectively, inclusively and circularly” manage social and ethical impact issue. This must be explained in detailed policies adopted on employee health and safety, the environment, respect for human rights and the fight against corruption, including within production chains. The bottom line is that while Italy may be lagging behind in the fast-developing world of due diligence and national implementation of EU rules, Italian risk managers and those who work for firms operating in Italy need to prepare now for the inevitable rule changes. “While there is no specific law on supply chain due diligence yet, the regulatory framework in Italy is, however, heavily influenced by the recent developments at European level, and supply chain due diligence requirements derive from the ongoing transposition of the various European obligations described above. Therefore, it will be crucial to see how the Italian legislature will transpose them, turning them into new obligations for companies operating in the domestic territory,” concludes Rödl & Partner.

Italian risk managers must prepare for due diligence rules

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