A group of 20 companies, including IKEA, Unilever and Aldi, have called on the European Union to ensure new legislation compelling companies to undertake human rights and environmental due diligence matches the measures put in place by the UN and OECD.
Parliamentarians will soon vote on the Corporate Sustainability Due Diligence Directive (CSDDD) , but the corporates have signed a letter calling for the new law to ensure the definition of due diligence does not “diverge” from those offered in the UN Guiding Principles on Business and Human Rights (UNGPs) and OECD Guidelines.
The letter makes a number of other calls. The due diligence rules should be “risk-based” and “apply to the entire spectrum of risks across the full value chains of companies in all sectors, including financial institutions”.
It should, the letter says, “incentivise” organisations to examine company activities that “heighten or reduce risks to people, the environment and climate” across the entire value chain.
They also want the due diligence process to engage with stakeholders, including unions, local communities and human rights and environmental defenders.
Perhaps most importantly, the group calls for “meaningful enforcement” through supervision and effective “civil liability”.
The letter concludes: “The Corporate Sustainability Due Diligence Directive will not achieve its full impact if it harmonises expectations between EU member states while diverging from the accepted international standards of the UNGPs and the OECD Guidelines.”
Civil liability
The directive is some way from being rubber-stamped but, as it nears the end of its development process, there have been growing concerns that the directive is weak in some areas, particularly the issue of “civil liability,” which is designed to help hold companies to account.
The UN Guiding Principles have been widely recognised as a global standard for business and human rights and have been endorsed by governments around the world, including the US and UK.
The EU’s due diligence measures are relatively new and follow innovations at national level in countries including France and the Netherlands. Even the UK’s Modern Slavery Act was, at one point, well ahead of the EU.
However, criticism of the CSDDD, particularly from non-government organisations, has been growing, with claims that it pulls its punches.
Many NGOs have called for stronger civil liability provisions, including a “duty of care” requiring companies to take “all reasonable” steps to prevent harm.
Unions have argued the liability rules need to be bolstered with specific measures allowing employees to bring claims under the legislation, while campaigners have called for clauses that would potentially make companies responsible for the full cost of damage to the environment.
Harm offensive
Legal experts have suggested the EU needs to provide more detail about civil liability, in particular the standards used to judge “harm” caused by a company’s activities.
This week, Euractiv, a news site, reports that parliamentary discussion of the directive has taken longer than expected because of disagreement over whether the due diligence measures applies to the upstream supply only or whether it should include the “use” of products downstream.
Euractiv says Amnesty International is concerned that a failure to include “use” of a product could “shelter some of the worst corporate human rights offenders in Europe”.
Though the due diligence laws will soon be finalised, there is still much wrangling to be done. While there is time, campaigners will continue to pitch their concerns. Expect more as the deadline looms.