A human rights review of the EU Non-financial Reporting Directive
March 8th, 2019
by ECCJ and Clean Clothes Campaign

At present, under the EU Non-financial Reporting Directive (NFRD), companies are required by law to disclosure their human rights risks, impacts and due diligence in their annual reports. However there remains a problem: it is not specified how companies are meant to do this.  Meanwhile, studies continue to reveal companies failing to report properly on their human rights risks, impacts and due diligence.

This report provides a qaulitative study of four cases of company reporting under the NFRD, each with significant and serious human rights risks and impacts. The examples highlight the need to clarify the legal duty to report on human rights due dilignce.

ECCJ, together with the civil society Alliance for Corporate Transparency, endorses the UNGP reporting framework as the human rights reporting framework companies must use. This is because it provides the clearest and most sophisticated common standard for companies as to how to undertake and report on their human rights risks, impacts and due diligence.

Mandating the UNGP reporting framework would help guide companies to report; result in comparable data through a common standard; inhance the quality of information; and help protect rights’ holders from adverse human rights impacts by companies. The UNGP reporting framework would also help prime companies for upcoming legal duties to undertake human rights due diligence.

Finally, the report calls for sanctions for non-compliance with the directive and disclosure of meaningful supply chain data, such as supplier lists, to empower civil society to hold companies account for what they say in their reporting.