Wednesday

1st Feb 2023

Opinion

Big corporations' fresh lobbying push for a new EU legal regime

  • Big business' key demand is a new EU court for corporations, as well as substantive rights, which could ultimately put governments off regulating in the public interest (Photo: Florent Le Gall)

In April 2020, justice commissioner Didier Reynders committed to an EU legislative initiative which will require European companies to comply with mandatory human rights and environmental "due diligence".

The announcement followed a European Commission study which concluded that many years of voluntary "Corporate Social Responsibility" measures have failed to protect the environment and human rights in their global supply chains.

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The commission has committed to make EU supply chains more sustainable in the European Green Deal and the Trade Policy Review. Over 500,000 people and 700 civil society organisations worldwide expressed support for this law.

A recently-released report by Corporate Europe Observatory (CEO), the European Coalition for Corporate Justice (ECCJ) and Friends of the Earth Europe shows why this proposal was recently delayed: corporate lobbyists are fighting any new legislation that would hold companies accountable for human rights abuses and environmental destruction.

Several big corporate lobbies like BusinessEurope show outright hostility towards the Sustainable Corporate Governance directive.

Seemingly cooperative corporate lobby groups, such as the European Cocoa Association and CSR Europe, have also tried to dilute the law that aims to prevent abuses and provide justice to victims.

As Claudia Saller, Director of ECCJ said: "Many companies and their corporate lobbies are playing a two-faced game. They appear supportive by calling for an EU law instead of national ones, while at the same time, they are doing everything they can to hit the brakes and make the future EU law as toothless as possible."

New legal privileges

Meanwhile under the influence of another intense lobby campaign – exposed in a new report by Corporate Europe Observatory on Monday (28 June) – EU civil servants are drafting policy options which would have the exact opposite effect: granting big business new legal privileges.

Analysing dozens of documents obtained through freedom of information requests, the report reveals how banks like German Commerzbank, lobby groups like the Association of Large French Companies, BusinessEurope as well as corporate lawyers and lobby consultancies are pushing for a new legal regime that would enable industry to bypass national courts when settling disputes with EU member states.

Big business' key demand is a new EU court for corporations, as well as substantive rights, which could ultimately put governments off regulating in the public interest.

In 2019 and 2020 corporate lobbyists held at least a dozen meetings with the responsible European Commission department, DG FISMA (Directorate General for Financial Stability, Financial Services and Capital Markets Union).

Big business also flooded commission inboxes with letters and position papers calling for a new corporate court. At high-profile events corporate executives repeated the message that there was not enough legal protection for business in the EU.

As EuroChambres, the Association of European Chambers of Commerce, made clear: "Companies are not against measures that protect common interests that matter to society at large, however they cannot be detrimental to businesses' investments."

Industry wants to change EU law so that it mirrors the corporate super-rights, and wildly-speculative damage calculation methods, which are common in international investment law.

Provisions such as fair and equitable treatment should be "codified, specified and further developed" in new EU legislation, according to Commerzbank and Deutsches Akieninstitut.

This would risk driving up the costs associated with public interest regulations in the EU, making it easier for business to secure large amounts of compensation paid out by the public purse.

The mere fact that the European Commission considered these options in a September 2020 non-paper - though there is a fierce internal discussion ongoing - is deeply worrying.

Firstly because the introduction of new investment law standards and an EU-wide system to enforce them could discourage and prevent governments from regulating in the public interest when their proposals are opposed by powerful economic actors.

Secondly, trade unions, consumer and environmental organisations, who oppose new special rights for investors, criticise the contrast between the Commission's approach to civil society concerns and those of corporations.

As the Austrian Chamber of Labour remarked: "While the commission has long ignored workers' requests to create minimum social standards for the EU... complaints about the lack of protection for investors, on the other hand, have immediately prompted the commission to run a consultation on the issue."

Author bio

Pia Eberhardt and Olivier Hoedeman are researchers at Corporate Europe Observatory, an NGO which monitors lobbying of policy-making in Brussels.

Disclaimer

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

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