After several months of delay, today, the European Commission presented its proposal for a Corporate Sustainability Due Diligence Directive in Brussels. The main objective of this new legislation is to integrate into European law international standards such as the UN Guiding Principles on Business and Human Rights - adopted globally over a decade ago - and standards developed and approved by the OECD.
“By addressing due diligence and corporate governance, the European Commission’s proposal represents an important piece of the corporate sustainability puzzle. However, it risks proposing a default solution to companies, that relies on tick boxing and pushes the responsibility further down the supply chain,” said Frank Bold policy officer Julia Otten.
The legislation proposes a long awaited EU standard on human rights and environmental due diligence, based on global standards that define it as a risk-based approach: If a company identifies potential or actual severe impacts in its business relationships across its full value chain, it needs to determine appropriate action, track implementation and results, and communicate them to affected stakeholders. “This responsibility cannot be fulfilled by adding clauses in contracts with suppliers as proposed by the Commission,“ said Julia Otten: “This risks becoming a nominal compliance exercise as the one seen with the Data Protection Regulation, generating bureaucracy, whilst falling short of providing effective protection for stakeholders.”
Following fierce lobbying by industry groups, the proposal initially referred to as 'Sustainable Corporate Governance' has been presented with only a few elements to foster integration of sustainability and long-term thinking in corporate governance rules. The Commission’s proposal clarifies company directors’ duty of care to take into account human rights, the environment and climate in their decisions. Companies have to adopt a climate transition plan in line with the 1.5 degree target of the Paris climate agreement, however, no legal consequences are foreseen for breaching this obligation. Linking bonuses of company executives to sustainability objectives remains voluntary.
Directors will also have to oversee due diligence actions. However, the Commission refers to Member States to ensure enforcement and that directors ‘take steps’ to take into account the identified impacts in corporate strategies.
“We welcome the specification of the directors’ duty of care, but it is essential that directors are clearly responsible for the approval of strategies that react to problems. The Commission should not leave this up to national law,” said Frank Bold policy officer Julia Otten.
The proposed legislation requires EU and non-EU companies in the single market with more than 500 employees and revenues of 150 million Euros to prevent human rights and environmental abuses along their full value chains. In high-risk industries such as agriculture, garment and extractives, only companies with more than 250 employees would be covered, while SMEs would be exempted. Over 100 companies and investors have recently shown strong support for such a European due diligence legislation and have called on the EU Commission to move this process forward including “all businesses operating in the EU market, regardless of sector and size”.
The Commission’s proposal will now be handed over to the European Parliament and the EU Member States for negotiations and agreement on the final legislation.
Prague Municipal Court ruled today in favour better protection of human health from air pollution in the capital of the Czech Republic. The Court revoked most of Prague's Air Quality Management Plan, issued in 2016 by the Czech Ministry of Environment.
Czech Supreme Administrative Court ruled yesterday in favour of air quality and protection of human health. In the case local citizens and an NGO from Ostrava agglomeration, the most polluted region in the Czech Republic, succeeded with their claim for better air quality.
Yesterday, on 5 November 2018, a lawsuit against the Ministry of the Environment (MoE) on liability for health damages and death of her husband from lung cancer was filed with the District Court in Prague 10. The plaintiff seeks damages for lung cancer, which she has managed to cure, but her husband has succumbed to the illness in October. The cause of the disease is seen in the long-term excessive concentration of air pollutants at their place of residence in Ostrava-Radvanice and in the fact that the MoE failed to provide effective measures to decrease the pollution to legal limit values.
