I am very pleased to share this guest post by Dr. Rachel Widdis of Trinity College Dublin who has been working with the Irish Coalition on Business and Human Rights to develop an outline proposal for human rights and environmental due diligence legislation in Ireland. The Coalition is also advocating for legally binding regulation for corporations at national, EU and global levels (see Towards a Transformative Treaty on Business and Human Rights).
The European Commission Sustainable Corporate Governance initiative is a pivotal juncture, presenting a key opportunity to introduce obligations on business to conduct human rights and environmental due diligence. The past decade has proven that voluntary implementation alone is insufficient to fundamentally alter business practices. Companies may erroneously consider corporate social responsibility policies suffice, and fail to act upon their responsibility to respect human rights. This debate has moved on, and now focuses on introducing mandatory obligations.
In 2020, the EU Commissioner for Justice committed to introduce corporate human rights due diligence. In January, the European Parliament JURI Committee adopted a report on corporate due diligence and accountability. It called on the Commission to present legislation ensuring companies address and are held accountable for human rights, environmental and governance risks and impacts throughout their global value chains, including sanctions for non-compliance and civil remedies. The Commission initiative is expected in mid-2021. A Directive is anticipated, such that Member States can implement stronger measures. Already legislative initiatives and proposals exist across multiple Member States (see corporatejustice.org/).
The Irish Coalition on Business and Human Rights (ICBHR) made a detailed submission supporting a robust EU framework during consultation on the initiative. The ICBHR is a grouping of civil society organisations and experts, and is a member of the European Coalition for Corporate Justice. The Coalition was established in response to concerns about the negative human rights and environmental impact of business, and advocates for increased accountability, access to remedy, and national oversight concerning the protection of human rights. It strongly supports legal obligations of human rights and environmental due diligence, requiring companies adopt continuous processes to identify actual and potential risks and impacts, and to prevent, mitigate and account for such risks and impacts in their operations and throughout their value chain. It believes the EU and Member States should lead meaningful change.
Meaningful Human Rights & Environmental Due Diligence
Ultimately, what is achieved will depend on how robust the criteria and standards introduced are. Firstly, the duty should align with international standards. Explicit reference to ‘internationally recognized human rights’, should include relevant sources of law and conventions protecting those particularly at risk and in situations of higher risk such as women, indigenous peoples, and human rights defenders. Complementary reference to comprehensive international environmental standards is required. The EU framework should apply to all businesses established in the EU, and to companies operating or placing goods or services within the EU. Meaningful consultation across all stages of the due diligence process is crucial, particularly with those who may be disproportionately affected, such as workers, local communities, human rights defenders, and indigenous peoples. Due diligence should be gender responsive.
Well-designed legislation, consistent with the UNGPs and complementary initiatives, can successfully mitigate any risks or issues while providing harmonisation, transparency, and certainty.
In this context, due diligence looks to those beyond the business itself. It is a risk based, proportionate approach. It is relative to the size, nature, and context of a business, and is driven by potential severity of risks and impacts. Therefore, SMEs would meet their responsibilities in proportion to their size and risk. Studies of the compliance costs of due diligence regimes do not identify a disproportionate economic burden on companies. However, it is crucial that any costs do not land upon the most vulnerable within value chains. The ICBHR does not support provision for entities to simply declare ‘no risks’. Similarly, any sector-specific provisions should supplement, not delimit, the general legislation. The framework should clarify directors’ responsibilities to ensure the integrity of due diligence processes, including disclosure and effective implementation. Well-designed legislation, consistent with the UNGPs and complementary initiatives, can successfully mitigate any risks or issues while providing harmonisation, transparency, and certainty.
The measure of effectiveness of due diligence is the extent to which harm is prevented and mitigated. If legislation emerges as passive ‘reporting’, it will not serve rights holders or wider stakeholders. Currently, those negatively impacted, including communities whose land has been destroyed through environmental damage or have been forcibly displaced, women who have experienced sexual violence and victims of forced labour, face extensive barriers to remedy. ICBHR members, many of which are development and humanitarian organisations, regularly encounter communities impacted by environmental and human rights abuses, for example, associated with the Cerrejón mine in Northern Colombia. Provision must be made for legal liability, including for failure to conduct appropriate due diligence, preventative relief, and civil and criminal mechanisms. Within proceedings, the burden should be on business to prove due diligence. Recognising existing challenges for victims and the risk of denial of justice, EU Regulations should be altered to facilitate grounding jurisdiction and choice of law. States must reduce existing barriers to remedy.
Robust due diligence obligations should positively impact sustainability. For the ICBHR, the aim for this initiative is that it reduce power imbalances, protect those enduring the negative impacts of business, and provide accountability for harm. Its success will depend on the extent to which justice and preventing harm to people and the planet remain at its core.