"Global solutions to global problems: Why EU legislation and a UN instrument on corporate accountability must be complementary", 27 October 2021

Business activities of EU and non-EU companies too often cause or contribute to human rights violations and environmental devastation in the world. While forthcoming EU legislation could tackle this problem to a certain extent, an international binding instrument to regulate the behaviour of corporations in international human rights law is also needed. This Treaty currently negotiated at the UN would be a step forward in closing the judicial void and avoiding a complex and uneven patchwork of standards and rules. This briefing argues that regional and global instruments are both needed and should complement each other, ensure effective prevention and guarantee robust enforcement, liability and access to justice for affected people...

...There is a growing push from some EU member states and non-EU countries to introduce corporate accountability legislation. In a joint statement ahead of the 7th session of the LBI, UN human rights experts underlined that while regional instruments such as the EU directive are on the way, “the process to negotiate an international instrument provides an opportunity for States to create a global level field” and “avoid fragmented approaches to corporate responsibility”.

If regions legislate in an uncoordinated way and come up with diverging standards of conducts for companies, this could lead to an uneven patchwork of rules worldwide that make the situation more complex and un-equal for both affected people and companies, create new loopholes for companies to escape responsibility, create regulatory uncertainty and allow them to opt to invest in countries with low protection standards.

An international binding instrument is needed to provide protection to rightsholders all around the world, and avoid that transnationally operating companies have different human rights and environmental obligations in different countries and regions. In addition, boundary-transcending crises like the climate emergency, biodiversity collapse and related issues like deforestation require global solutions. For instance, to meet already agreed goals in multilateral environmental agreements such as the Paris agreement, a coordinated effort is needed to legally oblige companies to reduce their GHG emissions.

The European Parliament resolution on corporate due diligence and corporate accountability of March 2021 also called on EU to finally engage in the negotiations for the UN LBI15. And in a cross-party letter to the European Commission, 75 MEPs16 noted that to be effective and workable, EU level regulation must be complementary and aligned with the UN LBI. To avoid a race to the bottom on standards, both processes must align towards an upward harmonisation and work to effectively prevent and remedy harms...