For years, from the tropical forests of West Africa to the Guajira peninsula in Colombia and every corner of every continent, European companies have profited from human rights abuses, environmental destruction and climate breakdown. In April 2020, the European Commissioner for Justice committed to introducing a new law to hold corporates to account and turn the tide on years of extractive and abusive practices by companies. 

Tropical rain forest in Borneo being destroyed to make way for oil palm plantation

Tropical rainforest in Borneo being destroyed to make way for AN oil palm plantation. Rich Carey/Shutterstock

This law must require businesses to conduct due diligence along their whole value chains to prevent and mitigate their harmful human rights, environmental and governance impacts. The law must also ensure victims of corporate abuse can hold companies liable when they suffer harm.

Following the  European Parliament vote in March in favour of robust legislation, which had strong cross-party support, and a public consultation on the law to which over half a million people from around the world responded, the Commission is expected to publish a legislative proposal this June.

Our new policy briefing – Holding Companies to Account: How a new EU law can help create a more sustainable future – sets out our key proposals for a robust human rights and environmental due diligence obligation and corporate liability regime in EU law.

This briefing aims to support the development of a strong and enforceable EU corporate accountability law. Crucially:
  1. The law must require all companies, across all sectors - including finance - that are carrying out business in the EU’s internal market to conduct human rights and environmental due diligence (HREDD).
  2. Mandatory HREDD will require companies to identify, assess, prevent and mitigate the negative human rights, environmental and governance risks and impacts in their operations and value chains, monitor the effectiveness of the steps taken and publicly account for this process.
  3. HREDD must incorporate meaningful stakeholder engagement and a requirement for companies to remedy harms.
  4. The law must create a robust liability regime and strong enforcement mechanisms to hold companies accountable both when they cause harms and when they breach the due diligence requirements.
  5. The liability regime should include administrative, civil and criminal liability. This must allow victims of harm outside of the EU to access EU courts to ensure that there is meaningful access to remedy for those most impacted by harmful business activities.

As the climate crisis continues to spiral, with activists and defenders subject to increasing human rights violations, companies have faced few consequences for their role. The European Union cannot solve these crises alone – but this legislation is an opportunity to show global leadership on the most pressing crises we face and help create a more sustainable future.