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The respect of human rights is the most fundamental value that we have as a society. Nevertheless, economic globalisation has lead to the massive exploitation of human rights in developing countries for the benefit of multinational enterprises (MNEs). The outsourcing and offshoring of production and services have had huge environmental and social costs.
European MNEs have been continually associated with violations of workers' rights, environmental damage, and harm to local communities. The reason for these continued violations is complex and multifaceted, yet of central significance is the law that governs these MNEs’ legal structures and accountability.
Subject to certain exceptions, the parent companies and boards of directors of MNEs are not legally responsible for the adverse human rights impacts directly linked to their operations, products, or services by their business relationships, including those caused by their subsidiaries, subcontractors, or customers. While victims of human rights abuses are typically entitled to pursue legal action in the country where the abuse took place, there may exist significant practical barriers, including the lack of an effective judicial system.
An additional problem is that even if the victims of corporate related abuse can make a legal case against the parent company of an MNE under the jurisdiction of an EU Member State, the existence of legal, procedural, and institutional barriers still prevent these victims from gaining access to an effective remedy.
The concept of human rights due diligence has recently garnered attention as a major tool that has the potential to bridge this governance gap. It sits at the core of the United Nations Guiding Principles for Business and Human Rights, which recognize and clarify the state duty to protect human rights, the corporate responsibility to respect them, and the right of people to access remedy for violations of human rights.
We work with the European Coalition for Corporate Justice (ECCJ), of which we are a Steering Member, and other civil society groups, and renowned legal experts to develop and promote solutions to the above mentioned problems.
The Russian war in Ukraine has, in addition to the COVID-19 global pandemic, once again highlighted the need for corporate human rights and environmental due diligence (HREDD) regulation, such as the proposed EU Corporate Sustainability Due Diligence Directive (CSDDD).
The next months are key to determining what kind of sustainability data companies will disclose. For the transformation to an economy within planetary boundaries, we call on the ISSB to develop standards that go beyond climate, require reporting on key impact data and ensure climate-related disclosures are sufficiently granular to be meaningful.
The European Commission, Parliament and Council reached an agreement for the new EU Corporate Sustainability Reporting Directive (CSRD) that clarifies disclosure obligations for large companies and listed SMEs, and mandates the development and adoption of mandatory EU corporate sustainability reporting standards.