Brussels, 1 December 2022 – EU ministers meeting in Brussels today look set to clash over the upcoming EU law on corporate sustainability, despite the urgency of setting common standards for business in the face of deadly climate change and war, warned the European Coalition for Corporate Justice, adding that the bloc must prioritise the most vulnerable without delay. 

A 28 November draft of the text suggests that governments will shield companies — such as producers of pesticides, weapons and surveillance tech — from scrutiny for the harms their products and services create. By limiting rules to a vague concept of ‘chain of activities’ and not entire value chains, companies could continue to supply to business partners implicated in international crimes or work with distributors violating workers’ rights. The use of weapons and other war materials whose export is authorized would also not be covered. 

The draft law is also facing an intense push from a handful of member states led by France to exclude the financial sector from requirements to carry out human rights and environmental checks in their ‘downstream’ dealings, leaving financiers of fossil fuels, deforestation and human rights violations outside its scope. This comes as the OECD published another set of guidelines on responsible conduct in the financial sector and as more than 50 NGOs wrote to ministers asking them to include all financial services, given their leverage over industry.

ECCJ policy officer Sylvia Obregon Quiroz said: “While some member states moved quickly and constructively, others wanted to squeeze through loopholes the size of an oil spill, just weeks after talking a big game at COP27. Allowing many powerful companies to evade legal responsibility will ultimately mean less corporate accountability for wrongdoing. The message business will clearly hear is ‘you can keep pretending to respect human rights, the environment and the climate without consequences’.” 

The EU’s future law will force large companies in the bloc to risk-assess their operations and redress injured parties. However, legal barriers faced by claimants in court cases against companies — such as high costs, short time limits and limited access to evidence — will likely remain unaddressed, making it more difficult for vulnerable workers and communities have their day in court for forced labour or unsafe working conditions. 

The Council text will also likely fail to deliver on climate action and environmental protection. Over 200 civil society groups called on European legislators to add a requirement for companies to conduct due diligence on their climate impacts and implement real transition plans to the meet the Paris agreement. 

ECCJ policy officer Sylvia Obregon Quiroz said: “Without climate obligations, ministers will basically give a stamp of approval to greenwashing gone mad. Instead, governments need to get serious about setting a minimum level of acceptable business conduct so that we have any chance of withstanding the havoc of the climate, nature, financial, energy and health crises. What governments keep ignoring is that today’s climate transition costs would be miniscule compared to the bill that’s looming if we do nothing. It’s clear that a sustainable business is one that survives and moves with the times.” 

According to a YouGov poll, over 80 percent of citizens from across multiple EU countries want strong laws to hold companies liable for overseas human rights and environmental violations. 

Since the European Commission released its proposal in February 2022, the European Parliament and the Council have been drafting their own stances towards due diligence. Today’s decision will confirm the Council’s position for the trialogue negotiations, which should start in the spring of 2023. 

ENDS. 

Contact 

Sylvia Obregon Quiroz, Policy Officer: sylvia.obregon@corporatejustice.org  

Iva Petkovic, Communications Officer: iva.petkovic@corporatejustice.org  

European Coalition for Corporate Justice (ECCJ) is the largest civil society network devoted to corporate accountability in the EU. Representing over 480 organisations from 17 countries, we are the only European coalition bringing together civil society, trade unions, consumer organisations and academics to fight for accountability, transparency and justice for people harmed by corporate abuse.  

Read more on our website and follow us on Twitter and LinkedIn. 

ECCJ’s identification number in the Transparency Register is: 48872621093-60