Tuesday

6th Dec 2022

Opinion

Cardinals speak out: EU needs corporate due diligence

  • Cardinal Jean- Claude Hollerich: 'When their interests are at risk, multinational companies have a secret weapon they can use: the Investor-State Dispute Settlement mechanism' (Photo: Archdiocese of Luxembourg)

In the recent years, scandals involving multinational companies have proliferated, putting into question the morality of our economic system.

Private interests have been systematically prioritised to the detriment of our global human family and our common home.

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Citizens all over the world have witnessed the scandalous revelations of the Panama Papers around tax evasion, have seen the race to the bottom in the car industry to pollute more and heard how fast fashion brands take advantage of poor labour and safety regulations in global South countries to produce cheaper clothes.

And when their interests are at risk, multinational companies have a secret weapon they can use: the Investor-State Dispute Settlement (ISDS) mechanism, a private tribunal system through which they can bring to court any state, claiming back lost benefits because states passed social or environmental laws.

These are just a few examples of how multinational companies are benefitting from weak regulatory systems for their profits, but many more untold stories continue to wreck people's lives everyday while destroying our planet.

This profit-driven system and the throwaway culture it brings needs to be challenged, now more than ever, in a time when the pandemic has upended our certainties and provided the opportunity to re-assess our world system and spark a just transition.

Our societies can and must evolve towards greater respect for each other and our environment. But for that to happen, we need courageous decision makers to take action with the EU leading the way.

As cardinals, we can't just be bystanders.

Moral obligation

We have a strong moral obligation to speak out about this issue which continues to affect our communities. Guided by our Catholic values, we decided to add our name to this statement, joining over 110 bishops to call on governments to better regulate private corporations.

We demand that they keep up with their promises and their obligations under international law to protect human rights from corporate abuse.

Our call comes after a positive development in this direction: the announcement by the EU commissioner for Justice Didier Reynders in May of a mandatory and robust legislation on human rights due diligence.

Under no condition should this process be stalled.

This legislation should ensure that companies have the legal obligation to identify, assess, stop, prevent and mitigate the risks and violations to the environment and all human rights throughout their supply chains and to substantially improve the possibilities of affected people to claim for compensation in national civil courts.

Before this, we have seen the development of various voluntary initiatives, from the Global Compact in the early 2000 to the UN Guiding Principles on Business & Human Rights, adopted in 2011.

But as none of these initiatives are legally-binding, private companies can still operate following their own rules. Since self-regulation has proven to be insufficient; we argue that new laws to regulate the private sector must be binding.

Binding regulations are also a matter of transparency.

In the absence of a strong mandatory law, citizens all over the world are not guaranteed that the products they buy and use every day are manufactured without violating human rights and don't hide a story of abuse.

People at both ends of global supply chains need assurances as to the morality of our trade markets.

Prevention is only one side of the coin though, because some ill-disposed companies can still violate human rights even in the presence of a law. They should hence be legally accountable for their acts. For that we believe the laws should include enhanced access to justice for victims, in order to comply with the states duty to protect them against corporate abuses.

We recall Pope Francis, Evangelii Gaudium - 206 "Each meaningful economic decision made in one part of the world has repercussions everywhere else; consequently, no government can act without regard for shared responsibility".

Encouraged by these words we call on all states to engage in the UN negotiations for a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations.

Such a treaty would prevent any country or company to make use of exploitative models of production and accept the destruction of the creation in order to improve their competitive position in the world market.

Within the just transition we envision an economic system that serves people and the planet first, celebrating the interconnectedness of our human family and of our beautiful common home.

Author bio

Cardinal Jean- Claude Hollerich is the archbishop of Luxembourg. Cardinal Charles Maung Bo is the archbishop of Yangon, Myanmar. This open statement also has the backing of more than more than 110 bishops.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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