Wednesday

1st Feb 2023

MEPs seek to hold firms liable for supply-chain abuses

  • Deforestation. Only a third of EU companies carry out human rights or environmental due diligence checks in their supply chain (Photo: crustmania)

MEPs on the legal affairs committee are calling on the European Commission to urgently propose a new law that holds companies accountable for human rights or environmental abuses that happen across their supply chains.

"Now is the right time to set the gold standard for doing business," said MEP Lara Wolters from the Socialists and Democrats.

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"In the EU we buy clothes, food and phones in the knowledge that they are safe to use, but we do not know if they were produced without any harm to the environment or human rights," she added, warning that voluntary schemes have proven to be insufficient.

Only a third of EU companies carry out human rights or environmental due diligence checks in their supply chain.

However, around 70 percent of European businesses are in favour of EU-wide corporate accountability laws.

MEPs want all companies functioning in the EU internal market, including those established outside the EU, to identify and solve potential issues that can violate human rights (such as trade union and labour rights) or contribute to climate change across their whole value chain - while providing access to legal remedies for victims.

Additionally, MEPs called for an outright ban on all imports linked to severe human rights violations - such as forced or child labour.

The report, which was approved on Wednesday (27 January) with strong cross-party support, will be voted on in the March plenary.

Civil society groups welcomed the initiative, arguing that decades of voluntary "corporate social responsibility" initiatives have failed to solve problems, such as child labour and deforestation, which remains systemic to many sectors.

"Workers at the lowest rung of global supply chains often risk their lives and limbs in hazardous working conditions as companies ruthlessly pursue a race to the bottom," said Lotte Leicht from Human Right Watch.

"Binding EU law governing companies' human rights and environmental due diligence obligations is urgently needed to protect workers and their communities," she added.

Richard Gardiner from NGO Global Witness, said that forcing corporations to listen to local communities' concerns can "prevent environmental and human rights abuses before they happen".

Intense lobbying

From forced Uyghur labour to the Amazon deforestation through oil pollution in Nigeria, "the objective of this text is to make multinational companies legally responsible for violations committed throughout their supply chains and end their impunity," said the co-president of the Left in the parliament, MEP Manon Aubry - warning that this proposal is facing intense lobbying.

BusinessEurope, one of the most powerful corporate lobby groups in Brussels, wrote to members of the committee last week urging them to vote against the report.

In a letter, they argue that "it is impossible to manage all the risks related to a company's business relationship along the whole value chain".

However, members of the Nordic Business Network for Human Rights, such as IKEA, Vestas or Lego, said this initiative has the potential to "turn commitments into action, and promote a human rights culture within companies across the value chain".

The commission is expected to put forward a legislative proposal on corporate accountability in the first half of the year.

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