Last week, the European Union agreed a law that would have
been almost unthinkable a decade ago. It paves the way for people around the world to take companies to
court in Europe for human rights abuses and any associated environmental
damage.
Big companies will now be just as responsible for damage
they cause in other countries as they are at home.
Here are our five takeaways on the Corporate Sustainability Due Diligence Directive (CSDDD):
1. It gives people a chance to fight back against corporate abuse
The law will make it possible for people who suffer corporate abuse outside of Europe to sue large companies operating in the EU in European courts.
As many of the companies responsible for human rights abuses or destruction of the environment around the world operate in the EU, this could be a game changer for communities by creating opportunities to hold companies accountable for their actions.
When communities in the Global South suffer harm at the hands of corporate giants, it is often difficult for them get justice locally. By avoiding situations where authorities may be corrupt or biased towards the company, or where companies deliberately overwhelm the legal system or exploit legal loopholes, affected communities will now have the option to seek justice.
The law helps remove many of the barriers that prevent victims from seeing justice, including extending the amount of time communities have to bring cases to five years. This will help to reset the imbalance of power that often makes it impossible to build a case against the companies that withhold the evidence victims need to support their claims.
2. New rules will help communities protect their land and livelihoods
In a significant win, the law will oblige companies to engage with people affected by their projects before they begin and throughout their life cycles. This helps ensure that communities have a voice when it comes to how companies are operating, and rules out some nasty company behaviours.
For example, companies shouldn’t be able to withhold key information from communities or intimidate or displace them to force their dangerous projects through.
In February, Global Witness identified how hundreds of residents were displaced to make way for a new mega-airport in the Philippines after a botched ‘consultation process’ in which residents reported that armed soldiers went door-to-door, leaving community members feeling “terrified”.
The new law will require companies to take steps that help prevent outcomes like this.
3. Big banks weasel their way out of green laws – again
Last year, the financial sector managed to get a free pass from rules that would have prevented them from investing in deforestation.
In this law, they’ve pulled off the same trick.
After major pushback from the French government, the new rules don’t limit what banks can invest in or where the money from people’s pension funds ends up.
Your bank remains free to invest in new oil and gas projects
fuelling climate breakdown, and in others linked to brutal conflict.
Last month
we showed how European banks and investors, including Allianz, Deutsche Bank, Crédit
Agricole and Intesa Sanpaolo, are investing
over €700m in companies tied to brutal violence against civilians in South
Sudan. This law won’t require banks to change these business practices.
4. Corporate climate action – that does not go far enough
Significantly, the law marks the first time that big companies will be legally required to act on climate.
They will need to write and ‘put into effect’ climate transition plans, which will put Europe’s biggest corporate players – including fossil fuel majors – on a pathway towards reducing their emissions in line with the Paris Agreement and the EU’s climate targets.
But the law does not go far enough to hold companies accountable on climate and guarantee the action we urgently need. This is because the enforcement measures on climate are weaker that other types of harm under the Directive.
5. This law wouldn’t exist without a huge movement pushing for change
While national governments watered down proposals that would have been far more ambitious, this is still a landmark moment and has been a long time coming.
In 2021 over half a million people from around the world wrote to European lawmakers asking them to introduce this law, and since then we’ve worked with other NGOs in Brussels and beyond to ensure that it is as ambitious as possible.
Compared to what we need to combat the climate crisis and clean up corporate behaviour for good, it’s short of the mark.
But it is an important step forward.
It introduces a fundamental shift from a voluntary approach to responsible business conduct to binding rules for companies. In many ways therefore, it is an outlier –many big businesses never wanted it, and it only exists because of years of campaigning from civil society organisations.
There is more work to be done but we stand ready. While the financial sector may have been let off the hook this time, the huge movement that helped get this law passed will go into 2024 fighting to make sure it doesn’t happen again.
A version of this article originally appeared in Context.