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Commentary: EU corporate due diligence - new rules, or businesses rule?

26 Nov 2020

Few ideas are as bold and exciting in Brussels policy circles as that of corporate due diligence. It became a 'hot topic' back in April when the EU's justice commissioner Didier Reynders told an audience of movers and shakers that new human rights and environmental rules for business are coming in 2021.

This proposal could be a big milestone in the fight for corporate accountability – but it's all about getting the nitty-gritty right.

The European Commission won't reveal exactly what the draft law will contain until the public consultation closes in early February, but some burning questions have already been confirmed by Reynders: requirements will apply to companies of all sizes and across all sectors, from cocoa to big tech...

But for such a law to be a game changer, it needs to go beyond ineffective box-ticking, and really measure up to the scale of change needed. It would be meaningless if not backed up by strong provisions, such as placing civil liability on companies.

After all, isn't prevention the best cure? ...

As is so often the case with corporate scandals, establishing responsibility is like grasping at straws.

That's why governments will need to play their part too – compelling companies to hand over evidence, publicly publishing findings of investigations, imposing proportionate and dissuasive fines, and empowering victims to seek and obtain access to remedy.

Whilst due diligence legislation is no silver bullet, it is a crucial opportunity to ensure companies' supply chains hit human rights and environmental standards...

But the momentum is also fragile.

Despite overwhelming support for new corporate due diligence rules in the EU Parliament's development and foreign affairs committees last week, we expect the vote in the legal affairs committee to be neck and neck, and are keeping our eyes on a series of possible amendments to the text.

Conservative business associations have also joined the fight, peddling false claims and muddying the waters, despite an overwhelming body of evidence showing that corporate misconduct requires urgent political action, and that corporate due diligence is not only feasible (as demonstrated by a small number of principled companies) but also improves long-term business performance.

The Brussels rumour mill has it that the EU Commission is being pressured to put forward a weaker proposal than what civil society organisations, trade unions, and the European Economic and Social Committee say is needed.

That would give multinationals another carte blanche to continue with 'business as usual' – a blow to the millions of Europeans worried about what awaits future generations, and to the millions more workers and communities affected by bad business overseas.

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