Responsible Business Conduct - the European Business model of the 2020s

Heidi Hautala, Member of European Parliament & Vice-President of the European Parliament

Current Vice-President of the European Parliament, Heidi Hautala, on the need for leadership to put in place mandatory human rights due diligence

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This blog is part of a series 'Towards Mandatory Human Rights Due Diligence'.

At the moment, in most European markets it is legal to sell and market products fabricated with the help of slave labour. It is high time to change this. Fair and just globalization and a sustainable future cannot happen without responsible business conduct and proper human rights due diligence by companies. And this must extend to the very up stream sources of products.

70% of world trade takes place in global supply chains. We are well aware of the increasing grave side effects of global trade. We know that there are over 40 million slaves in the world today, generating an estimated $150 billion of profits a year. We also know that planetary boundaries have been crossed, and European consumption and supply chains contribute to deforestation, be it for soy fields, palm oil plantations or cocoa production. There cannot be shared prosperity on the planet without re-introducing humanity into the way we do business. It is equally imperative if we are to reach the Sustainable Development Goals.

The EU especially has an urgent need to show leadership

No company willingly competes on slavery or child labour and there are excellent examples of responsible companies that demonstrate that it is possible to do business in a way that respects rights. However, the playing field must be levelled out. Free-riders cannot be accepted in any sector, whether under the public eye or not. This is why the EU especially has an urgent need to show leadership and put in place mandatory human rights due diligence on companies, which obliges them to analyse, effectively mitigate, report on and account for their actions. No less important is it to ensure access to justice in European courts to victims of corporate human rights abuses. 

National laws containing at least some of these elements are in place or being developed in several EU member states. But it is obvious that instead of a patchwork of almost 30 frameworks, EU level legislation is in everyone’s interest. And it goes without saying that a law has to have teeth to be effective.

Processes on state, EU, and global level are all important. However, the EU has an enormous leverage as the world’s biggest single market area. By pulling its act together, it can have a major effect in producer countries. Acting responsibly at home would also allow it to have considerable impact at international negotiation tables.

A sea change in the past 5 years has been that responsible companies have stepped out on the public arena and started demanding the legislator to do its part.

The past years have shown that there is a rapidly growing demand for action on mandatory human rights due diligence in and around the EU. The European Parliament’s cross-party working group on Responsible Business Conduct, which was established in 2017 has swiftly become a real focal point. It has attracted interest from the whole spectrum of actors from private sector to CSOs, academics and intergovernmental organizations.

A sea change in the past 5 years has been that responsible companies have stepped out on the public arena and started demanding the legislator to do its part. There is more and more understanding that the smart mix prescribed by the UN Guiding Principles on Business and Human Rights means that there needs to be legislation in order to reach the stated aims. 

Progressive companies have recognized the demands of the millennials as consumers. Moreover, for an increasing number of investors there is no financial sustainability without environmental and social sustainability. 

Through multi-stakeholder cooperation, effective dialogue and by recognizing the impetus of moving this agenda forward, there is a good chance to make headway with the incoming EU Commission and European Parliament. When it comes to the Council, I have my hopeful eyes on Finnish leadership during the second half of this year, and I am glad to see the strong commitment and statements of Germany with a view to its presidency in 2020.