MEPs back proposals requiring firms to comply with human rights and environmental standards

The draft legislative initiative calls on the Commission to urgently present a law that ensures companies are held accountable and liable when they harm - or contribute to harming - human rights, the environment and good governance.
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By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

02 Mar 2021

The legislative initiative on ‘Due Diligence and Corporate Accountability’ - recently adopted by Parliament’s legal affairs committee - will be put to the vote in the plenary on 8 March.

EU Justice Commissioner Didier Reynders has committed himself to proposing a binding due diligence law for companies operating in the European internal market in the first half of this year.

Reynders has vowed that the upcoming legislative proposal will be an integral part of the European Green Deal and the European Recovery Plan.

The parliamentary report going to plenary clearly states its support for European rules requiring companies to identify and remedy risks to human rights, health, the environment or good governance arising from their activities throughout their supply chain.

Speaking at a press conference on Tuesday, Greens MEPs Heidi Hautala, a member of the Legal Affairs Committee, and Anna Cavazzini both endorsed the initiative and called on Member States to adopt it “as soon as possible.”

Cavazzini, a  German member of the International Trade Committee, told reporters, “Much of civil society has been fighting for this due diligence legislation and I hope it will also guide the Commission’s proposal on the trade policy review which is due out in the spring.”

“There are numerous examples of human rights violations and this legislation will try to mitigate this. We want to change the behaviour of companies and the measures should be a condition for operating on the EU market.”

Hautala added, “This can be milestone legislation. The recent vote on the text enjoyed cross-party support and sends a strong signal to the Commission about how modern corporate accountability law should apply.”

“A new law on corporate due diligence will set the standard for responsible business conduct in Europe and beyond. No longer will companies be able to harm people and the planet without being held accountable” Lara Wolters, S&D

“Actually, this is not a novelty because we have had UN Guiding Principles since 2011 about how companies should respect human rights. But these new rules would make the EU  a world leader in this field.”

“This is a global standard for corporate accountability so this is what you might call a Brussels moment as companies would have to fulfil new requirements.”

Binding EU due diligence rules would oblige companies to identify, address and remedy aspects of their value chain, including all operations and direct or indirect business relations, that could or do infringe on human rights.

These cover social, trade union and labour rights, the environment, including contributing to climate change, and good governance.

All companies wanting access the internal market, including those established outside the EU, would have to prove that they comply with environmental and human rights due diligence obligations.

MEPs, including the two Greens members, have also called for additional measures, including a ban on importing products linked to severe human rights violations such as forced or child labour.

These aims, they said, should be included in trade and sustainable development chapters of EU trade agreements.

MEPs have stressed that in order to guarantee effective reparations for victims, companies should be held liable for their actions and be fined for causing harm or contributing to it.

“Much of civil society has been fighting for this due diligence legislation and I hope it will also guide the Commission’s proposal on the trade policy review which is due out in the spring” Anna Cavazzini, Greens/EFA

The rights of victims or stakeholders in third countries - said to be especially vulnerable - would also be better protected, argued the Greens deputies.

Any future legislative framework on due diligence should, they say, be broad and apply to all large undertakings in the EU, including those providing financial services.

Hautala said that at present there was a “mushrooming of national initiatives” in countries such as France, the Netherlands, Finland and the UK, which has a modern anti-slavery act.

She said, “Each also have laws and there is nothing wrong with this, but we also need to project similar measures at the EU level. Victims must also be able to access to justice too.”

On this, she cited Nigeria’s fight against Shell in the UK. Recently, the UK Supreme Court ruled that oil-polluted Nigerian communities can sue Shell in English courts.

The decision is seen as a victory for the communities after a five-year battle.

The Niger Delta communities of more than 40,000 people claimed that decades of pollution had severely affected their lives, health and local environment. Royal Dutch Shell did not dispute that pollution had been caused, but argued it could not be held legally responsible.

Finnish member Hautala, speaking from Parliament, added, “We also want a ban on imports of products related to severe human rights violations, for example, forced labour.”

She said, “The most important thing in this draft legislation is ensuring that companies will know what exactly is expected of them.”

“All this requires a big change in corporate culture and, yes, there will be hectic debate on this proposal starting with the vote in plenary next week, but I am glad this has entered the political debate.”

She told reporters, “Some Member States such as Germany and Finland have been far more active on this than others, but human rights and the environment both need to be present in the legislation.”

She voiced concern about the prospects of the legislation getting through Council and admitted, “it could take up to two years so there now needs to be a big push from civil society and progressive countries.”

Speaking separately, Dutch Socialist Lara Wolters said, “A new law on corporate due diligence will set the standard for responsible business conduct in Europe and beyond. No longer will companies be able to harm people and the planet without being held accountable.”

“The new rules will hold companies legally responsible for avoiding and limiting risks in their entire value chain. They will give victims a legal right to support and to seek reparations, and will ensure fairness, a level playing field and legal clarity for all businesses, workers and consumers”, she added.

It is claimed that existing international frameworks on due diligence, such as the UN Guiding Principles on Business and Human Rights, have proven that a voluntary approach does not sufficiently address the negative impacts of globalised business activities.

A Commission study published in February 2020 found that only one in three companies in the EU is currently taking due diligence measures, while around 70 percent of European businesses surveyed support EU-wide due diligence rules.

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