Our Priorities

What is human rights and environmental due diligence?

Human rights and environmental due diligence is generally understood as a process with which companies can efficiently identify, prevent, mitigate and account for the negative impacts of their activities or those of their subsidiaries, subcontractors, and suppliers.

Why do we urgently need a new European law?

Too many companies across the globe have been profiting from exploiting people and the planet. Their activities have caused or contributed to climate breakdown, biodiversity collapse, the erosion of workers’ and trade union rights, forced and child labour, growing poverty, and the killings of environmental and human rights defenders. This requires immediate action.

Corporations today operate across national borders with few or no obstacles. They often outsource and subcontract parts of their production – such as making clothes, harvesting coffee beans or mining for minerals – to countries with laxer environmental and human rights standards. In those countries, they can act with impunity. 

They dodge responsibility by hiding behind their long and complex value chains, which are complex by design. In such cases, untangling and pinpointing responsibility is difficult for victims of corporate abuse. When European companies are confronted with human rights or environmental abuses in their value chain, many companies abdicate responsibility to their suppliers. Companies argue that they have no influence over suppliers, despite having hired them.

With the increasing globalisation of value chains comes the need for clear rules to make companies accountable for preventing, mitigating and remedying any human rights or environmental rights abuses in their value chains.

Passing laws requiring European companies to implement due diligence would have multiple benefits, including:

• preventing human rights abuses and environmental harm worldwide;
• enhancing access to justice for victims of corporate abuse, in and outside Europe;
• helping state authorities meet their duty to protect human rights;
• improving companies’ risks assessment and management, making them more resilient.

International recognition for rules to make business accountable

We have international voluntary guidelines on how businesses should act: the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD’s Guidelines for Multinational Enterprises. The UNGPs, adopted in 2011, address corporate abuse in relation to human rights. The principles consist of three pillars: the state’s duty to protect rights; the companies’ responsibility to respect rights; and provisions facilitating access to remedy for victims of corporate abuse.

The revised OECD Guidelines for Multinational Enterprises were set out in 2011. Originally adopted in 1976, they are the first set of international guidelines and consist of a list of recommendations from governments to corporations on how to conduct human rights due diligence. In 2018, an even more detailed OECD Due Diligence Guidance for Responsible Business Conduct was adopted by the OECD after tripartite negotiations involving states, business and civil society.

While the UNGPs and OECD’s Guidelines are supported by the international community, they remain largely voluntary. They fail to provide justice for victims, prevent corporate abuse and change business conduct. According to the 2020 study for the European Commission, only 16% of the companies surveyed carried out human rights due diligence throughout their whole value chain.”

What has happened until now?

In April 2020, the EU Commissioner for Justice, Didier Reynders, committed to proposing new human rights and environmental rules for businesses. 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 no longer merely encouraged – to play.

In the autumn of 2020, the European Commission launched a public consultation to gather input from citizens and organisations on how to design these new rules. Over half a million people – and approximately 700 civil society groups, trade unions and academic institutions – participated in the consultation. Most respondents demanded a strong EU law requiring all companies to identify, prevent and address their human rights and environmental risks across their entire value chain. Respondents agreed that companies must be held liable for harmful practices in their home countries and abroad and face strong penalties if they break the rules.

In 2021, the European Parliament adopted a resolution on corporate due diligence and accountability. It sent a powerful political signal to the Commission not to leave out key elements in its forthcoming proposal, including parent company liability for the harm caused by their subsidiaries, better access to justice for victims around the world, and strong sanctions and fines for companies that fail to address negative risks and impacts of their global operations.

In February 2022, the European Commission released its proposal for a directive on Corporate Sustainability Due Diligence.

This directive could represent a landmark step forward in the direction of minimising the negative impacts of businesses on workers, communities and the environment worldwide, and advancing corporate accountability and justice.

However, despite many positive elements, the proposal falls short on numerous fundamental points. The text is riddled with flaws and shortcomings that risk dramatically limiting the law’s positive impact on human rights and the environment. These require significant improvements over the course of ensuing negotiations.

In December 2022 , EU governments agreed on a general approach, confirming the Council’s position for the trialogue negotiations, which should start in the spring of 2023. The ministers’ proposed changes would leave the inclusion of the financial sector at the discretion of each member state. Moreover, the definition of ‘chain of activities’ would shield companies producing pesticides, weapons or surveillance tech from scrutiny for the harms their products and services create.

What do European citizens demand?

According to a recent 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. People affected by corporate abuses must be allowed to take the companies responsible for those abuses to court in Europe. There was consistently high support from across the nine EU countries polled. The survey was carried out in Austria, Belgium, the Czech Republic, France, Germany, Ireland, the Netherlands, Slovenia and Spain.

The survey found that:

• 87% of citizens agreed that companies should be legally obliged to prevent human rights violations – such as forced labour or land grabbing.
• 86% agreed that companies should be legally obliged not to contribute to environmental harms – such as air pollution or destruction of biodiversity – outside the EU.
• 86% agreed that when companies do cause or contribute to human rights violations and environmental crimes around the world, they should be legally liable.
• When told examples of environmental and human rights abuses outside the EU, 84% agreed that victims should be allowed to take the companies responsible to court in the country in which the company is headquartered.

How to ensure the law protects people and the planet?

1. Cover the whole value chain: The most serious human rights and environmental abuses often occur on the lowest tiers of the value chain — in countries with less stringent rules, little state support and high levels of poverty. These conditions can foster human rights abuses like forced and child labour.
2. Cover all companies: Bigger companies tend to cause more damage, but that is not always the case. In the garment sector, many European SMEs are still connected to global value chains. The Commission’s proposal must also cover all economic sectors.
3. Improve access to justice: People must be able to pursue justice if a corporation’s activity violates their human rights or local environment. It is essential that the EU makes sure businesses do not hide evidence; provides reasonable time limits to bring cases; and allows for a large number of claimants to seek compensation collectively.
4. Hold businesses liable: Companies based or operating in the EU that cause, contribute, or are linked to human rights or environmental abuses must be held legally responsible via civil liability (to grant compensation to victims) and administrative liability (for a failure to undertake due diligence to prevent harm from occurring).
5. Give the law teeth: We need an effective law that enforces companies’ obligations and sanctions non-compliance.
6. Include workers and affected communities: Trade unions, affected communities, women’s groups, indigenous communities and other relevant parties must be able to provide input on risks and impacts.

We encourage the European Parliament and EU Member States to take into account ECCJ’s reflections and recommendations.