On Wednesday, April 29, during a webinar organised by the European Parliament’s Responsible Business Conduct Working Group, the EU Commissioner for Justice, Didier Reynders, committed to a legislative initiative on mandatory human rights and environmental due diligence obligations for EU companies in early 2021, which will include liability and enforcement mechanisms and access to remedy provisions for victims of corporate abuse.
Claudia Saller, Coordinator of the European Coalition for Corporate Justice (ECCJ), said, "This is a milestone in civil society’s struggle for binding rules on corporate accountability. After many years of insisting on voluntary measures for companies, the Commission has finally understood the urgent need for better protection of human rights and the environment, and the important role that companies must be obliged - and not only encouraged - to play. We will follow up on the Commissioner’s announcement and hold him to his word. ECCJ is well prepared to explain how this new piece of legislation can be implemented in practice.”
The Commissioner’s announcement comes after the publication of the European Commission’s study on due diligence requirements through the supply chain, conducted by the BIICL, which underlined the failure of corporate voluntary measures and affirmed the need for mandatory rules at EU level, as Reynders explained. For the sake of a level playing field, numerous companies, as well as investors, have already expressed support for such rules.
The need for corporate justice has become even more urgent now that Europe is affected by a health, economic and social crisis, triggered by the Covid-19 pandemic, which is having a devastating impact on human rights in developing countries and laying bare the vulnerability of our economic model. Committed not to postpone this initiative, the Commissioner assured MEPs that it will be part of both the European Green Deal and the European Recovery Plan.
After touching on very different topics such as sustainable corporate governance, directors’ duties and corporate due diligence, Reynders confirmed that the latter will follow an autonomous legislative path, particularly independent from the review of the Non-Financial Reporting Directive. It seemed clear that the Commission has already started working on it, and Reynders announced a public consultation to be launched soon.
Challenged by MEPs and CSOs, Reynders specified further details of his proposal, including some burning points that ECCJ has long been advocating for.
- The legislative initiative will establish mandatory requirements for EU companies, he repeatedly stated, moving beyond voluntary measures. Company law will have a pivotal role even if is not clear yet whether the Commission will propose a Directive or a Regulation.
- Reynders outlined the scope of the initiative, which will be cross-sectoral in order not to lead to market fragmentation, covering the entire supply chain and all corporate-related risks, including human rights, social and environmental ones.
- When asked whether the initiative will concede a transitional period to enable companies to adapt to the new rules, he stressed that “we need to act now”.
- Reynders also highlighted that the initiative will incude companies of all sizes, but that SMEs will receive an ad hoc treatment.
- The initiative will be strongly based on the UNGPs, the OECD and the ILO frameworks and will involve all relevant stakeholders, including trade unions.
- After several MEPs raised the need to ensure compliance with this future piece of legislation and access to justice for victims, Reynders agreed that sanctions will be provided for, since “a regulation without sanctions is not a regulation”, and suggested a possible network of supervisory authorities at national level, coordinated at EU level.
- As for the remedies for victims, the debate is still underdeveloped, but the Commissioner agreed with the need to provide for civil liability, and suggested looking into existing EU mechanisms, such as the proposed rules on representative actions for the protection of the collective interests of consumers.
ECCJ Coordinator Claudia Saller intervened in the debate by welcoming the Commissioner’s statement and recalling the legislative and political developments in several EU Member States, which helped pave the way for an EU-wide initiative. She invited the Commission to seize this momentum and the clear mandate from the study’s findings to take legislative action towards a robust framework for all companies across all sectors. Quoting the study, Claudia Saller stressed that only combining due diligence with proper corporate liability and enforcement mechanisms will guarantee effectiveness of this future piece of legislation. She emphasised the need to include access to justice and remedy for victims of corporate abuse, including workers, local communities and women.
Reynders’ initiative is likewise supported by Berlin, as stated by Carsten Stender, from the German Federal Ministry of Labour and Social Affairs, who wished the Commissioner good luck. Such a support is extremely timely, considering that Germany will take over the Presidency of the Council of the EU in the second half of 2020. ECCJ, Oxfam and the Lieferkettengesetz (the German campaign for a supply chain due diligence law) had already invited Commissioner Reynders to an event on June 8, aimed at making mandatory Human Rights and Environmental Due Diligence legislation a priority of the German EU Presidency.
Reynders’ announcement is an outstanding achievement for ECCJ, which has been campaigning and advocating for EU mandatory Human Rights and Environmental Due Diligence legislation for over a decade. ECCJ will monitor the Commission’s next steps and continue to lead civil society advocacy in Brussels as the initiative moves forward.
The event’s host and chair of the Responsible Business Conduct Working Group, EP Vice-President Heidi Hautala, welcomed Commissioner Reynders to the growing community supporting mandatory Human Rights and Environmental Due Diligence legislation. Now that the Commission and the Council have joined the European Parliament’s committed groups in this journey, as Heidi Hautala said, we need to start discussing the technical details to make a real success of it.
The recording of the webinar is available here.
The transcription of the Commissioner's speech is available here.