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28th Jan 2023

Opinion

How Berlin and Paris sold-out the EU corporate due diligence law

  • The Elysée spent its political capital trying to limit the type of business relationships covered, and obtain exemptions for its companies producing arms (Photo: Adeolu Eletu / Unsplash)
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A landmark draft EU law that could prevent and compensate victims for harms like land-grabbing, forced labour or oil spills in businesses' value chains has finally made its way to member states. They have just signed off their preliminary position on the Corporate Sustainability and Due Diligence Directive (CSDDD) — which will almost certainly make sure this law is dead on arrival.

There are three key elements to making this corporate sustainability due diligence law work, which EU governments have got very badly wrong.

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Firstly, access to justice and remedy for victims, which should be at the heart of this kind of law, has become a sideshow. The Council's position would not offer any help to poor communities, struggling to stand up to a big EU company who stole their land and denied them fair compensation, or workers' families suing for damages after a deadly factory fire (both real examples).

At best, member states are ignoring victims, and at worst, they are trying to make it even harder for them to get justice.

Germany even tried to mobilise support to turn the due diligence process, designed to prevent human rights violations, into a shield to protect companies from being taken to court. Thankfully this did not gain much traction, but member states have, however, successfully included new hurdles to holding companies liable.

Secondly, even if it were possible to get remedy under the law, it might not matter, as governments pushed to exclude most business relationships from the scope of the law.

Most powerful member states were unified in wanting to cut out the 'downstream' part of the value chain (and have largely succeeded).

This means companies will not be held accountable for the harms their products and services cause. That includes pesticide harm to the environment and health, surveillance tech being used to spy on activists or journalists, and aviation fuel used in wars.

France has its own law in place since 2017, and could have been a pioneering, progressive force on this file in Brussels.

Intervention from the Elysee

Instead, the Elysée spent its political capital trying to limit the type of business relationships covered, and obtain exemptions for its companies producing arms.

They particularly pushed to let investors off the hook, i.e., those who finance and enable corporate activities that trample on human rights, or wreck the environment. The result is that there is no obligation for member states to regulate investors and finance sectors, they can pick and choose, threatening to create a patch work of regulations that undermines the very purpose of legislating at EU level.

For a striking example of why the law's reach should be expanded rather than shrunk, just look at FIFA. Its handling of human rights issues prior and during the World Cup has dominated debate about the sporting event.

However, non-profits such as FIFA would not be covered.

Last but not least, some member states worked hard behind the scenes to exclude many types of damage from the scope. Germany successfully pushed to scrap a lot of human rights from the law, such as the rights of Indigenous People to their land and natural resources, and some fundamental workers' rights, including occupational health and safety.

And despite talking a big game at COP27, governments were totally unwilling to set enforceable rules to make companies reduce their greenhouse gas emissions in their global value chains and align with the Paris Agreement. It's little wonder that the latest round of climate talks tells us the 1.5 goal might be out of reach.

On Thursday (1 December), the Council agreed their top line negotiation position on the law. During the discussion, German minister Sven Giegold claimed the position showed that "in an energy crisis we [member states] are not selling out our values", however anyone reading this text will understand that this is exactly what they've done.

Member states, especially countries like Germany and France, who portray themselves as world leaders on issues like human rights and the climate crisis, need to wake up and realise that most people expect justice to prevail over profit.

Author bio

Jill McArdle is corporate accountability campaigner at Friends of the Earth Europe. Giuseppe Cioffo is from the CIDSE Sylvia Obregon of the European Coalition for Corporate Justice. These NGOs are part of the Justice is Everybody’s Business campaign, uniting 100+ organisations across Europe to call for a European corporate accountability law that protects people and plant from corporate harm.

Disclaimer

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

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