Filip Gregor
Head of the Responsible Companies Team
On Tuesday, October 6th, Filip Gregor, Head of our Responsible Companies section spoke at the conference on ‘Global Supply Chains - Global Responsibility: Human Rights and Decent Work in Global Supply Chains’ organised by the German Ministry of Labour and Social Affairs on the occasion of the German EU Council presidency.
Addressing the question of ensuring effective EU action on human rights, Mr Gregor stressed the importance of proper enforcement and corporate liability, pointing to the significance of establishing a due diligence framework in EU legislation that ensures judicial remedy for victims as well as responsiveness of companies in line with their capacities. You can read below his full speech:
Esteemed Ministers, dear organisers,
Thank you for the invitation. Out of respect to the ambitions of the conference, allow me to skip the formalities and go straight to the content.
I would like to answer the question ‘ What should the EU do’ with a quote:
“Relying on voluntary measures alone is not sufficient. We have tried that approach for decades. Now is the time to truly implement the smart mix approach by introducing clear and effective legal standards. While transparency and disclosure are integral steps of any proper due diligence, this legislation should rather focus on ensuring transparent business practices through effective liability provisions. Most importantly, any liability provisions need to both ensure effective deterrent for companies but also adequate remedy for impacted stakeholders.”
That very much sums up civil society’s views, but it was expressed by Théo Jaekel, of Ericsson in September in the European Parliament. We therefore applaud the work of the German government, Ministers Heil, Müller (and Lambrecht) in particular, for their dedication to bringing forth legislation and organising this debate. Taking up such responsibility is by no means common. It is not easy, but it is more than necessary. Victims cannot continue to be left to pay the costs of their own harm.
Secondly, I would like to explain why liability is so important.The purpose of due diligence is to help companies to meet their responsibility to respect human rights and thus contribute to the protection of human rights. A mandatory due diligence in which civil liability is absent is absurd. From a victim’s perspective, an honest title of such provision would be Catch XX, as they would be worse off than they are today. From a governance perspective it would be a twist on the agreements reached in the UN and the OECD.
Fortunately, it is the due diligence concept itself that makes the liability feasible from a legal point standpoint. As the Ministers have already alluded to, it is absolutely essential that where a failure of due diligence contributes to harm, that liability is recognised and judicial remedy made available – in line with the UN Guiding Principles. That is very far away from an idea that companies would be absolutely liable for ensuring that there are no human rights impacts in their value chain.
Liability is also important to make it clear what consequences are attached to breaking the law. It is an essential incentive for companies to take due diligence seriously. Once due diligence is embedded in their governance, most companies will make good faith efforts and do their best to try to prevent all human rights impacts irrespective of their actual liability. But potential liability is needed to get us there.
My third and last point is that “due diligence cannot be limited to any particular business relationships.It is impossible for a company to focus its efforts and resources correctly, if due diligence is restricted to the first tier of its supply chain. The most severe impacts in global value chains – deforestation, conflict minerals, forced labour - are by no means unexplored. The due diligence leads companies to focus on such severe matters (rather than minor compliance issues) , and provides a clear guidance as to the choice of an appropriate action on the basis of companies’ abilities. In these regards due diligence is a solution, not a complication.
Mr Gregor has represented Frank Bold within the Steering Group of the European Coalition for Corporate Justice. Please visit their website to read the latest briefings and updates on human rights due diligence and access to justice.
We have analysed hundreds of pages of technical documents and prepared a comprehensive overview of the sustainability reporting requirements under the forthcoming EU legislation. We summarise what ESG data will be critical for companies, banks, and investors in sustainability strategy and management and in the areas of climate change, environment, sustainable activities, employees and supply chains, due diligence, and anti-corruption measures.
Would you like to influence key EU developments on business, sustainability and climate change? Do you wish to combine environmental and economic perspectives? Do you want to help set European standards for transparency of corporate sustainability performance and help investors finance the transformation of our economy? Become a member of Frank Bold’s international team implementing this strategy.
Leading NGOs working on corporate sustainability and sustainable finance have published a briefing with key recommendations to help clarify directors’ responsibilities to oversee sustainability that fully fit with existing company law and corporate governance frameworks across Europe.
