Our Priorities

We advocate for European laws that guarantee corporate accountability and transparency, and ensure justice for victims of corporate malpractice.

Corporations today operate across national borders with few or no obstacles. Complex corporate structures and global value chains have made it difficult, often impossible, to attribute responsibility to European companies for human rights and environmental abuses in their operations, allowing them to profit from operating in countries where human rights and environmental standards are too low or are not adequately enforced.

Human Rights and Environmental Due Diligence (HREDD) 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.

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.
© Shutterstock / RAMNIKLAL MODI

 

Past developments

The United Nations Guiding Principles on Business and Human Rights (UNGPs) enshrined due diligence as a set of useful practical steps to address companies’ human rights and environmental impacts and to promote responsible business behaviour. 

Due diligence has also been included in international standards such as the OECD Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.

Although it is not currently a legal obligation for companies, some of its elements (such as reporting and impact assessment) are already incorporated into national and international legal frameworks. 

Governments also make use of due diligence when asking companies to comply with labour rights, environmental and consumer protection, or the fight against corruption.

Some States have gone one step further by directly embedding due diligence into law. One example is the French Duty of Vigilance Law, adopted in 2017. This law requires large French companies to establish and publish a vigilance plan with measures to adequately identify risks and prevent human rights and environmental abuses linked to their activities and those of their subsidiaries, subcontractors and suppliers. The French law also establishes civil liability for harm resulting from a company’s failure to observe its duty of vigilance. 

Another example is the Dutch Child Labour Due Diligence Law, adopted in 2019. This law creates due diligence requirements for companies operating in the Dutch market to identify, prevent and mitigate child labour risks throughout their global supply chains.

The EU has taken important steps towards the development of corporate due diligence, for instance with the adoption of the Timber Regulation and the Conflict Minerals Regulation, as well as the Non-Financial Reporting Directive, which establishes disclosure obligations on human rights risks and measures.

EU law tracker

What’s next

In April 2020, after the publication of the European Commission study on due diligence requirements through the supply chain, the EU Commissioner for Justice, Didier Reynders, officially committed to an EU initiative on corporate due diligence. A legislative proposal is expected in the 2nd quarter of 2021.

What is needed

ECCJ, which has long been calling for such legislation on mandatory HREDD and corporate liability, warmly welcomed the Commissioner’s announcement and is currently actively engaging in the process towards an effective and comprehensive regulatory framework that imposes robust corporate due diligence obligations and ensures access to justice and remedy for victims of corporate abuse. This means such regulatory framework should:

  1. Apply to all undertakings, including financial institutions, domiciled in a Member State
    or placing products on or providing services in the internal market.
  2. Require undertakings to respect, in their own activities, all internationally recognised human and labour rights, as well as the environment; and to ensure respect with those throughout their global value chain.
  3. Require undertakings to take all necessary measures in the exercise of due diligence,
    to meaningfully consult stakeholders for the purpose of defining and implementing due diligence, and to publicly report on these processes and their results.
  4. Require that due diligence extend to the undertakings’ entire global value chains.
  5. Compel Member States to provide for penalties and sanctions, to designate competent investigating and enforcement authorities, and to allow members of the public to challenge non-compliance.
  6. Compel Member States to provide for civil liability of undertakings for harm arising out
    of human rights abuses and environmental damage caused or contributed to by their subsidiaries, suppliers and other business partners.
  7. Ensure a fair distribution of the burden of proof, with the defendant corporation having to prove its relationship with the person involved in the harm and whether the former acted with due care.
  8. Harmonise time limits to take legal action by setting a minimum limitation period that is reasonable and sufficient, taking into special account the particularities of transnational litigation.
  9. Be qualified as overriding mandatory law, thus applying irrespective of the law otherwise applicable under private international law.