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Why Ursula von der Leyen's 'agenda for Europe' must put human rights at the core of business

5/8/19 - Phil Bloomer of BHRRC and Claudia Saller of European Coalition for Corporate Justice

Phil Bloomer of BHRRC and Claudia Saller of ECCJ make the case for mandatory human rights due diligence across Europe.

This piece was published in EU Observer on 5th August 2019

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

"A Europe that takes the lead on the major challenges of our time".

This was the ringing phrase that incoming European Commission president, Ursula von der Leyen, used to underline her ambition in her 24-page 'My Agenda for Europe' to gain the votes of members of the European Parliament.

Placing human rights at the core of business, and ending abuse, must surely count among those "major challenges".

Human rights abuses by business are rife both within Europe and in European companies’ supply chains abroad. In the last ten days since her election, the Business and Human Rights Resource Centre (BHRRC) has covered stories of European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies’ abuse in palm oil, including child labour, land grabs, and deforestation.

Von der Leyen has set out her broad social and economic objectives. She endorses the strengthened consensus for bold action on climate change with a European Green Deal; recognises widespread discontent on inequality with a ‘Union of Equality’ and an ‘Economy that works for people’; and calls for a ‘New push for European democracy’ to address the democratic deficit.

All these elements are welcome and can be deployed by our broad movement to persuade the new Commission Cabinet to put human rights at the core of business. However, von der Leyen’s proposed actions nowhere emphasise the human rights and social justice aspects of business. The need for radical reform to repurpose markets towards shared prosperity is absent, as is any challenge to irresponsible business to prevent abuse, and respect human rights in their operations and supply chains.

Von der Leyen’s agenda for social rights in business, for instance, consists of ‘a fair minimum wage’ (not a living wage), ‘social dialogue’, ‘improving the labour conditions of platform workers’, binding pay-transparency measures, and a ‘European Unemployment Benefit Reinsurance Scheme’.

But von der Leyen expresses progressive aspirations that could be met with bolder and more purposeful action on business and human rights. For instance, von der Leyen speaks of ‘a just transition’ to zero carbon economy with none left behind. This will take serious human rights due diligence in the formulation of the closure of dirty industry, and investments in the new clean industries. BHRRC is already recording worrying rises in allegations of abuse by the renewables industries. Von der Leyen also places emphasis on ‘the social market economy’, ‘social fairness and prosperity’, and fair taxation – ‘no race to the bottom’ (this must surely refer to corporation tax), stressing the taxation of tech giants.

We can point to our movement’s initial successes of the last five years in achieving greater respect for human rights at the European level: the conflict minerals regulation, the Non-Financial Reporting Directive, and the Action Plan for Financing Sustainable Growth. These all contain elements of mandatory human rights due diligence and transparency as core drivers to end corporate abuse, and promote shared benefit.

They are complemented by national initiatives such as the French Law on the Duty of Vigilance, the Dutch Child labour Law, the German National Action Plan on Business and Human Rights, the Finnish and Luxemburg Governments’ commitments to human rights due diligence, and the Swiss Responsible Business Initiative.

The opportunity is to gain a broad and deep consensus on the need for a Europe-wide law on mandatory human rights due diligence. This would achieve von der Leyen’s expressed ambition of leadership on a major global issue. We are close to a critical mass of understanding that without such bold action, the social market model is increasingly unsustainable and will not deserve to be sustained.

With public trust in global markets at a long-term nadir, and global markets associated with stagnant wages, precarious employment, abusive supply chains, inequality, and ecological crisis, business needs powerful and uncompromising market signals to re-orient itself towards social and environmental sustainability.

A mandatory human rights due diligence law does just that. Such laws would provide both mitigation of corporate legal risk if careful due diligence has been executed, and corporate liability if not. Using this ‘carrot and stick’ approach, this law will fundamentally tilt the calculus of risk for companies’ legal counsel, and in the boardrooms, towards respect for the vulnerable and the environment in their operations and supply chains.

With a rising number of European investors and companies increasingly convinced that this approach is either welcome or inevitable, there is every reason for optimism that we can achieve the ground-breaking precedent of Europe-wide legislation. A growing number of investors and companies now see this proposal as providing a level playing field for more responsible businesses by lifting the floor of minimum corporate behaviour and outlawing the cowboy-companies.

They also appreciate the move toward legal certainty, especially a Europe-wide approach that would help harmonize national approaches and avoid a ‘spaghetti soup’ of contradictory national legislations.

But it is the workers and communities that our movement serves that will have most to gain – both within Europe, and in the complex, opaque supply chains that reach into every corner of the world, and where so much of the most egregious abuse in business is hidden. For the first time, this law would give them the opportunity to insist on corporate due diligence to prevent abuse, and greater opportunities to seek redress and justice when harm occurs.