MEPs have launched ambitious plans for an EU law requiring companies to carry out human rights due diligence in their supply chains.
The demand of the next European Commission is at the heart of the shadow EU Action plan launched on 19 March by the European Parliament’s Responsible Business Conduct Working Group which covers the five-year term of the next EU executive.
Such a law would require companies to carry out checks on their supply chains and look at risks that their activities may be harming human rights. By publicly reporting on these risks, and on what they have done to deal with them, companies can show investors, consumers and local communities that they are committed to responsible and sustainable business.
The Action Plan seeks to implement the United Nations Guiding Principles (UNGPs) on Business and Human Rights.
Almost half of all major EU companies have been the subject of documented accusations of human rights violations.
However, lawmakers believe that the attitude of companies is shifting both in terms of business practice and due diligence law.
“There are more and more companies who say ‘we want to be responsible but we don’t want irresponsible to reap the profits. We want a level playing field,” said Green MEP Heidi Hautala, a member of the Parliament Working Group.
Hautala added that modern patterns of trade mean that corporate due diligence is the best way to monitor supply chains.
“We cannot trace international trade between states and regions any more, it is between companies in very long and complex supply chains. The groundwork that has been laid…will lead to the adoption of an EU-wide law on human rights accountability and due diligence,” added Hautala.
Virginie Mahin, global social sustainability and human rights lead for Mondelez International, said it would be “beneficial to have a binding law at EU level to provide a level field.
Businesses stress the need for a level playing field and a harmonised approach to avoid overlapping EU and national laws.
The European Commission has welcomed the Action Plan but has so far refused to commit to tabling new legislation.
On 20 March, the Commission published its own Staff Working Document assessing progress towards meeting the UNGPs. The EU executive had been “encouraging companies to carry out appropriate due diligence, including with respect to human rights protection along their supply chains”, the paper argues.
A 2011 commitment from the European Commission to develop an Action Plan on responsible business conduct has been left unfulfilled for almost a decade and is likely to lapse yet again with the outgoing Commission.
In the meantime, fourteen member states have developed their own National Action Plans, triggering national processes on the establishment of safeguards for human rights against business-related abuse.
France’s ‘duty of vigilance’ law and the Netherlands’ Child Labour Due Diligence bill require companies to show a ‘duty of care’ in their operations, investments and supply chains.
MEPs say it is time for the EU executive to stop dragging its feet, although both they and activists are keen to stress that they are not ‘castigating’ companies.
“It is not about castigating companies but unless you have binding regulation, companies will not change their habits,” said Hannah Mowat, campaigns coordinator of FERN, an environmental and social justice NGO.
“We’ve been doing a lot of finger-wagging at companies but actually we need to take responsibility…they are part of the solution but they cannot carry the entire solution. That’s why we believe it’s so important for the EU to take action,” Mowat said.
However, civil society activists and companies are also anxious to ensure that any new due diligence regulation is not just based on ‘knowing and showing’, and that there are sanctions for non-compliance.
Campaigners also say it is important to improve access to remedy for victims, alongside increased protection for human rights defenders.
“One crucial part of the Action Plan is a call for collective redress. For a form of class action mechanism that should be available to all victims of corporate abuse,” says Filip Gregor, head of the responsible companies section at lawyers Frank Bold.
[Edited by Zoran Radosavljevic]