"Commission study shows the need for EU-level legislation on due diligence throughout the supply chain on human rights and environmental impacts". Who would have thought just a few years ago that the Commission’s press department would write such a headline? And not only a headline but one based on a 1,000 page thorough research study including stakeholder consultations.
We are officially in a "post-voluntary" debate on due diligence. The question is now how due diligence can effectively be translated into binding rules. The context is more than ripe for the next step: We see European Parliament committees on legal affairs, trade, human rights and the environment all committed to pushing the Commission towards establishing legislation. We see two German ministries, from both sides of the political spectrum, committed to developing legislation in Germany. We see the Dutch government exploring policy options to regulate responsible business conduct beyond the present child labour due diligence law. In several EU countries, we see commitments to drafting laws or, at least, to examine that option as well as several parliamentary motions initiating this discussion.
We see up to twelve national level civil society campaigns asking for mandatory human rights and environmental due diligence across Europe at the moment, both at the national but also the EU level. 847,000 citizens signed the petition of the "Rights for People, Rules for Corporations -Stop ISDS" campaign, demanding binding rules for corporate accountability at the EU and international level. Over a hundred civil society organisations have called for EU due diligence legislation.
In Germany, the Minister of Labour and Social Affairs, Hubertus Heil (SPD) and the Minister for Economic Cooperation and Development, Dr. Gerd Müller (CSU) announced they will present discussion points for a supply chain law in early spring. Furthermore, the civil society coalition "Initiative Lieferkettengesetz" recently presented a legal opinion outlining essential elements of such legislation.
- As specified in the UNGPs and the OECD Guidelines for Multinational Enterprises, the obligation to exercise appropriate due diligence should extend to the company's entire corporate value chain.
- Falling behind these standards or focusing on issue-specific legislation would lead to fragmentation and have limited impact.
- Human rights violations and environmental damages are closely linked. Legislation therefore should address both adverse human rights and environmental impacts.
- Legislation should define sanctions if a company fails to comply with the obligation and designate a competent authority with powers to monitor and enforce compliance.
- It should establish civil liability of companies for damage. Companies should be liable if they, on account of a lack of due care, cause or contribute to damages they could have otherwise foreseen and avoided.
- Legislation should not only apply to large companies, but also to small and medium-sized enterprises whose business activity bears particular risk of severe adverse impacts on human rights and the environment.
In the second half of 2020 Germany will take over the Presidency of the Council of the EU. As pointed out by the German Parliament in a November 2019 motion on the protection of children, the EU-presidency is a great opportunity for the German government to advocate for an EU-wide mandatory due diligence legislation for companies in all sectors. But to do this with sufficient credibility, the German government should start working towards a German due diligence law now.
Many of the points mentioned above are included in the DG JUST study. The results affirm that there is an urgent need for regulatory action at EU level in order to protect workers, communities, and the environment from systematic, ongoing and worsening human rights and environmental impacts linked to the global supply chains of businesses and financial institutions.
The Commission must now act swiftly on the study’s findings and initiate the process toward a legislative proposal. For such a proposal to effectively address human rights abuses and environmental harm whilst enhancing remedy for victims, it is crucial that it includes corporate liability.
Robust legislation can only be achieved by ambitious governments who start setting the standards at home. EU legislation will come and governments should have a real interest in shaping this new tool to identify, prevent, mitigate and remedy adverse human rights and environmental impacts linked to European businesses' operations.
The German government has the power to give this agenda a real push, both at home and in Brussels. It would not only gain credibility among its voters but would seize this historic opportunity for the EU to promote human rights and fight against climate change, making sure that people and the planet are protected in the global economy.