Sweden: Proposed corporate due diligence law puts employee engagement in focus 

Author: Mattias Knutson

A Swedish inquiry based on EU law proposes mandatory human rights and environmental due diligence for the largest companies. For HR, employee engagement and complaints handling are central issues alongside operational risk management. 

Sweden currently lacks legislation imposing a general corporate due diligence obligation, regardless of the nature of a company’s operations, within the meaning of the EU Corporate Sustainability Due Diligence Directive (CSDDD). The Swedish government inquiry SOU 2026:56, published in September 2026, proposes a Corporate Responsibility Act implementing the CSDDD. 

The proposal targets companies’ own operations, subsidiaries and relevant business partners in their chains of activities. Companies would identify and address actual and potential human rights and environmental impacts, monitor their measures and communicate publicly. 

For HR, stakeholder consultation is a key feature: employees, trade unions and worker representatives would be involved in risk identification and action plans. This extends beyond the company’s own workforce. HR should coordinate these processes with existing information and negotiation obligations under the Swedish Co-Determination Act (MBL), rather than assume that one process automatically satisfies the other. 

The proposal also requires complaints and notification procedures, with confidentiality safeguards. Affected workers and relevant unions could use the complaints procedure. It would operate separately from statutory whistleblowing arrangements: employers should therefore review access, responsibility and follow-up rather than simply relabel an existing whistleblowing channel. 

The report proposes implementation at the EU minimum level and estimates that approximately 70–90 Swedish and foreign companies will be subject to Swedish oversight. 

Under the amended EU framework, the maximum pecuniary penalty is capped at 3% of net worldwide turnover. Core rules would apply from 26 July 2029. The Swedish proposal is open for consultation until 8 February 2027. 

Key Action Points for Human Resources and In-House Counsel 

Companies should assess potential scope, identify gaps in existing processes and assign ownership across HR, legal, procurement and sustainability. Useful early steps include planning worker engagement, reviewing complaints intake and documenting how identified risks lead to action and follow-up. Preparation should remain proportionate and track the legislative process and forthcoming EU guidance.