Due diligence in supply chains: A watershed moment on corporate accountability?
European Parliament is deciding its position on what an EU law on corporate due diligence should look like. Richard Gardiner explains more.
As the European Parliament begins developing proposals for a new – and momentous – law to hold business to account for its impact on people and planet, I wanted to set out how this process came about and what needs to happen now to ensure this really delivers results.
Status update: Where are we now?
Following the publication of the European Commission study on due diligence requirements through the supply chain earlier this year, in April, European Commissioner for Justice Didier Reynders announced to the European Parliament Responsible Business Conduct Working Group that he will introduce EU rules on corporate accountability and corporate due diligence in early 2021.
In response to this announcement, Members of the European Parliament are now starting work to develop a European Parliament position on what an EU law on corporate due diligence could look like. This work will take place within the European Parliament Legal Affairs Committee and will be led by MEP Lara Wolters.
The goal of this work is to influence the final Commission legislative proposal and ensure that the Commissioner follows through on his commitment to present an ambitious framework for this law.
As the world’s largest trading bloc, the EU is now looking to lead the global debate on corporate accountability and this new law will shape not only corporate behaviour within the EU but also globally.
Potential to be a real game changer?
Global Witness has long advocated for mandatory corporate accountability rules to tackle corporate abuse against people and planet.
Our recently published report 'Defending Tomorrow' shows that while land and environmental defenders continue to act as the first line of defence against climate breakdown, far too many businesses, financiers and governments either fail to protect them or – in the worst examples – can be complicit in the violence they face.
These brave people play a vital role challenging companies operating recklessly, rampaging unhampered through virgin forests, protected wetlands, indigenous territories and biodiversity hotspots. They are on the frontline of our global, collective fight against climate change. However, despite their importance to the preservation of our planet, our report shows that 212 land and environmental defenders were murdered in 2019 – the bloodiest on record, with the deadliest sectors for this violence being mining, agribusiness and logging.
Our findings show that an average of four land and environmental defenders are killed every week since the Paris Agreement was signed in 2016. These are reinforced by our previous investigations on continued deforestation, minerals that fuel and fund conflict, and grand-scale corruption.
There is clearly a legislative gap when governments and citizens have no legal means to hold corporations accountable for their human rights and environmental abuses. As the world’s largest trading bloc, the EU is now looking to lead the global debate on corporate accountability and this new law will shape not only corporate behaviour within the EU but also globally.
What needs to be in this new law?
Civil society united in their calls for the EU to introduce legislation on corporate due diligence. We have consistently pointed to the fact that voluntary measures have proved to be vastly insufficient and new legislation is urgently needed to establish clear, robust and enforceable cross-sectoral requirements on all business enterprises, including financial institutions, to respect human rights and the environment.
As the European Parliament begins to discuss the details of corporate accountability legislation, Global Witness is part of a coalition of NGOs that has published its call to action for the key elements needed to hold businesses to account:
- The new law must apply to all businesses, including finance, of all sizes and sectors acting in the EU.
- Business must have a duty to address all the adverse human rights, environmental and governance impacts in their global supply chains.
- Businesses must conduct Responsible Business Conduct (RBC) Due Diligence to identify, cease, prevent, mitigate, monitor and account for their adverse risks.
- Businesses must engage and consult with all relevant stakeholders, including human rights defenders and indigenous peoples, as part of their RBC due diligence.
- Businesses must be made liable for the human rights, environmental and governance adverse impacts in their global value chains.
So what happens next?
The months between now and the end of the year promise to be extremely interesting on the topic of corporate accountability across all the EU institutions.
Firstly, the European Parliament will aim to finalise its advice to the Commission by end 2020 in order to ensure that it can be taken into account in the Commission proposal.
Secondly, the Commission has draft plans to release a public consultation on the new due diligence legislation in Autumn 2020 to get public input on how to draft their proposal.
And finally, the German Presidency of the European Council have indicated that due diligence is a key political priority for their Presidency and they will aim to have Council conclusions on this topic by the end of the year.
At Global Witness, we will continue to engage with all the European institutions to ensure that EU policy makers live up to their commitments to introduce a meaningful and impactful new law.
Richard Gardiner is a Senior Campaigner for Corporate Accountability at Global Witness.