Europe takes a big step towards companies having ‘duty of care’ on #HumanRights
Last week, just prior to taking over the European Union presidency, the new Finnish government announced plans to make it compulsory for companies to conduct human rights checks. A year ago, this would have seemed out of the ordinary. But growing recognition of the human cost of weak regulations on business, coupled with an erosion of public trust in markets, has led to momentum around initiatives to ensure companies halt abuse in their supply chains, writes Business & Human Rights Resource Centre Executive Director Phil Bloomer.
On 14 May, the Dutch Senate adopted new legislation that says companies have a ‘duty of care’ to fight child labour in their supply chains. This year had already seen rumbles of debate around supply chain legislation in Germany, where a ministerial draft law became public in February, and related parliamentary debates kicking-off in the Danish parliament. On 3 June, the new Finnish government coalition published its programme, which includes a commitment to work towards such legislation nationally, but also at the European level, where it will control the EU presidency from 1 July.
The EU has passed legislation on specific issues such as illegally harvested timber or ‘conflict minerals’ in the past. But to regulate each issue separately has its limits. It was France that passed the first legislation with a general scope in 2017, the ‘Duty of Vigilance’ law. And this track has been followed in the political debates in Germany, the UK, Denmark, Norway, Finland, Switzerland and Luxembourg.
These ideas are not radical. In 2011, the United Nations and the Organisation for Economic Co-operation and Development (OECD) adopted by consensus new, coherent standards on how business should ensure it respects human rights in its global chains. A core element was the requirement to conduct due diligence on human rights risks in order to prevent such adverse impacts. Since then, the OECD has developed more detailed guidance on what good due diligence looks like. However, countries have been slow to turn this international soft law into hard law. Until now.
Companies seem to recognize this. William Anderson, in-house counsel for German footwear giant adidas, wrote for our blog series this week that “In short, it is not a question of if, but when such laws will be in place and how they will impact current business operations and practices”. In fact, a growing number of companies support this type of legislation, including BMW, Coca-Cola, and Trafigua, arguing that these laws level the playing field for responsible businesses and provide legal certainty of their responsibilities.
In the case of the Dutch child labour law, it was the chocolate company Tony’s Chocolonely which launched a campaign in support of the legislation, and managed to rally larger industry peers such as Nestlé Nederland, Barry Callebaut and other major Dutch companies such as Heineken behind a supportive letter to parliament. In Finland the dynamics went one step further: businesses and civil society campaigned to have such legislation in the new government programme as a joint coalition, comprising 140 entities from Attac to Coca-Cola Finland.
But most companies aren’t prepared, and that is why we need these laws. Last November, the Corporate Human Rights Benchmark found that 40 out of 101 of some of the biggest companies in the world were failing to carry out proper human rights due diligence. Looking at 100 companies’ reports under the EU’s Non-Financial Reporting Directive, the Alliance of Corporate Transparency found that while 90% reported a commitment to respect human rights, only 36% describe their human rights due diligence system in any detail.
The stakes couldn’t be higher. At least 150 people died when Vale’s dam collapsed in Brumadinho, Brazil, on 25 January, and there are hundreds of high-risk dams out there. 166 million hidden workers are toiling for the world’s 50 biggest companies with no direct relationship or responsibility. The growing power of major tech companies like Facebook and Google increasingly impact all our privacy. Mandatory human rights due diligence on companies would go some way to ensuring that companies rid their operations and supply chains of abuses and are held responsible when they fail to act.
It’s good that many European countries seem to be recognizing this, and now they cannot afford to falter.