The “stripping” of EU law on business and human rights to a “bare minimum” has turned negotiations at the United Nations into a “beacon of hope”, according to a leading academic.

Writing for the Business and Human Rights Centre, Nadia Bernaz, a professor of law in the Netherlands, says the rewriting in Brussels of the Corporate Sustainability Due Diligence Directive (CSDDD) means the UN’s efforts on a business and human rights treaty takes on greater importance.

“As the EU has retreated from its sustainability and corporate accountability ambitions, a disheartening but factual observation, it leaves a global leadership vacuum for other actors to fill.

“At a critical juncture, the treaty negotiations hold great symbolic and practical significance, providing a way forward to mobilise the global business and human rights community around a clear message that matters more than ever.”

A ‘binding’ agreement?

The UN’s Human Rights Council established a working group in 2014 to work on a business and human rights treaty. The next discussions are due to take place in October this year and will look at the latest proposed text of a “binding” agreement.

This would be a major step on from the guiding principles on business and human rights that were agreed in 2011.

The EU’s CSDDD was aimed at imposing an obligation on companies to undertake human rights and environmental due diligence in their supply chains and report on action when deficiencies were found.

However, it came under review following a report from former European Central Bank president Mario Draghi, arguing that the EU’s green legislation was a “major source of regulatory burden”.

As part of the so-called “omnibus” process, the CSDDD was revised—with its scope being reduced from about 3,400 companies to 1,000.

The EU’s Corporate Sustainability Reporting Directive went through similar changes.

Credibility burn

Bernaz aims swingeing criticism at the EU for its action. She writes: “Both the process and the outcome of the CSDDD saga call into question the credibility of the EU as a key actor in business and human rights.”

She says of the treaty process: “In a world increasingly marked by brutality and impunity… these ideas, through admittedly vague, offer a necessary counterpoint and a beacon of hope.”

While the EU may have softened its green laws, some observers believe that companies will nevertheless comply voluntarily.

One academic, Andreas Rasche, speculated that those companies which already have experience of non-financial reporting would continue with sustainability disclosures according to the new law.