The directive must align with international guidelines
29 September 2022
The Commission’s directive proposal for mandatory human rights due diligence is a step in the right direction, but to fulfil its aim it must be strengthened and better aligned with the UN guiding principles on business and human rights. Read Swedwatch´s analysis of the proposal and what we expect Swedish policymakers to put high on the agenda for its 2023 EU presidency.
(This text was updated on 6 December 2022.)
In February 2022, the EU Commission presented a long awaited proposal for a directive on corporate sustainability due diligence (CSDD). The proposal sets out a corporate due diligence duty to identify, prevent, bring to an end, mitigate and account for adverse human rights and environmental impacts in the company’s own operations and in its value chains. If it receives a favourable vote, EU member states will have to transpose the directive into national law. A strong directive would be a historic step forward to end corporate abuse of people and the planet.
How the directive is negotiated
The text of the directive is negotiated by concerned ministers of the member states in the Council of the European Union, and within the EU Parliament. When the institutions have agreed internally on a version, a final version of the directive is decided in trialogue negotiations between the Commission, the Council and the Parliament.
Shortcomings in the proposal
According to Swedwatch the proposal has significant flaws that need to be addressed. A coming directive needs to be in line with established international guidelines for corporate and human rights, but the current proposal deviates from important principals and incudes weaker obligations in several areas.
To lay a foundation for an efficient regulation it is, according to Swedwatch, crucial that the directive is designed so that:
Requirements for businesses to carry out due diligence are in line with the United Nations Guiding Principles on Business and Human Rights as well as OECDs Guidelines for Multinational Enterprises
Consultations with stakeholders are mandatory
Businesses can be held accountable for adverse impacts on human rights and the environment
Existing obstacles for victims to conduct a lawsuit and get access to remedy are eliminated
It covers all companies, regardless of size and sector
It is applicable throughout the value chain, from a company’s extraction of natural resources to its customer responsibility.
Moreover, Swedwatch believes that a coming directive must take the particularly vulnerable position of women, migrant workers and human rights and environmental defenders into account, and clearly address business operations in high risk- and conflict areas. Furthermore, it should be possible to exclude companies that do not comply with the obligations from public procurement.
On 1 December 2022 EU ministers agreed on a common negotiating approach for the CSDDD which significantly watered down the already flawed proposal from the European Commission. Among other, the proposed changes in the EU Council text would leave it up to each Member State to determine whether it wants to include financial services in the scope of the due diligence requirements. Furthermore, references to the “value chain” were dropped in favour of a more narrow definition on “chain of activities” that would only cover a small part of companies’ downstream operations, and as such increases the risk that firms will escape scrutiny for the harms their products and services might cause.
With Sweden holding the EU-Presidency in spring 2023, Swedwatch calls on the government, Swedish EU Parliamentarians as well as concerned Swedish interest groups to prioritise the issue and to work for a prompt adoption of a directive that ensures rightsholders’ interests.
The campaign kicked of with a public action in Brussels on September 6th 2022. The ‘scales of justice’ represent the current imbalance between corporate profits on one side and human rights, environmental and climate justice on the other side, and that public pressure can tip the scales toward change. Photo: Philip Reynaers / Photonews