Swedwatch welcomes EU Human Rights Due Diligence plans

ARTICLE | 8 May 2020

Swedwatch has long advocated for governments to enact regulations to ensure that companies conduct Human Rights Due Dilligence (HRDD) in their operations, value chains and investments, especially in sectors and countries with a high risk of human rights violations. The recent announcement by European Commissioner for Justice, Didier Reynders, of plans for EU legislation on mandatory corporate environmental and human rights due diligence is very welcome and Swedwatch looks forward to contributing to the process.

In order for mandatory HRDD legislation to have a meaningful impact on the protection of human rights and the environment, it must be based on the core principles of existing international frameworks, not least the United National Guiding Principles (UNGPs) and OECD Guidance for Responsible Business Conduct. It should:

  • Ensure that effective due diligence covering all material issues is undertaken by companies and does not become a box-ticking exercise;
  • Cover all sectors of the economy and consider both upstream and downstream value chains;
  • Ensure that due diligence is conducted with a gender sensitive perspective;
  • Ensure access to remedy for rights holders affected by corporate malpractice;
  • Establish consequences for companies not complying with the regulation.
  • Be aligned and integrated with other regulatory initiatives, including the EU’s sustainable finance strategy, the review of the non-financial reporting directive and the 2030 Climate Target Plan.

In addition, it is crucial that the requirements set forth by the regulation should not become a mere reporting exercise but actually establish a clear legally binding obligation for companies and buyers/procurers to understand, identify, assess, address and mitigate human rights and environmental harm in their value chains.

Swedwatch and many other civil society organisations have long argued that current frameworks regulating corporate duties for human rights and environmental impacts in global value chains are insufficient to hold companies accountable and to offer grievance and remedy to affected workers and communities. Companies can often evade liability for negative human rights impacts and environmental degradation in their value chains, while rights holders, both within and outside the EU, lack legal access to remedy for corporate violation of human rights abuses.

Swedwatch has since 2003 provided evidence for these claims and documented significant shortcomings with regard to the corporate duty to respect human rights and the environment and rights holders’ access to remedy in a variety of contexts. It has long advocated for mandatory legislation on human rights and environmental due diligence. Increasingly complex, dynamic and non-transparent supply chains and corporate structures make it difficult to monitor and scrutinise shortcomings related to the respect of human rights and the environment.

Swedwatch’s findings are backed by a February 2020 European Commission study on corporate due diligence requirements. The study concluded that a mandatory due diligence requirement throughout the value chain – even though entailing certain costs for European companies – would also present a host of benefits for them, including: increasing legal certainty, reducing legal complexity, creating a level playing field within the EU, improving risk management and possibly incentivising resource efficiency, and enhancing brand reputation and financial performance. Above all it would be the most effective way to protect human rights and the environment and provide rights holders with access to remedy.

In its research and engagement with companies and public actors Swedwatch has found that many companies lack an adequate understanding of the human rights and environmental impacts of their operations and value chains, as well as their obligations towards rights holders. Effective mandatory HRDD legislation at the EU level would go a long way toward addressing this and Swedwatch will contribute actively within national and European networks to ensure that the right legislation is brought forward.