Member States weaken human rights protections, fail to push companies to make climate plans, and let the financial sector off the hook
Brussels, 1 December – EU Member States today agreed their position on a new EU corporate accountability law, tabling a text that waters down any meaningful sustainability requirements for companies and makes it even more difficult for victims to showcase corporate harm. France also managed to lead a carve-out for the financial sector.
The Corporate Sustainability Due Diligence Directive – which aims to prevent companies operating in the EU from contributing to environmental and human rights harms – looks set to be significantly diluted, according to Global Witness.
Aurelie Skrobik, corporate accountability campaigner at Global Witness said “EU Member States have gutted plans to stop companies from fuelling human rights abuses and environmental destruction. If the final law looks like what was agreed today, the EU will have missed a once-in-a-generation opportunity to prevent destructive business practices from fuelling human rights abuses, climate breakdown and environmental damage.”
In the days leading up to the decision, France led a shock move to fully exclude the financial sector from mandatory human rights and environmental obligations, which passed in today’s Council meeting.
The Commission’s proposal mentions banks, investors and asset managers, but exempts them from the due diligence requirements that would apply to other sectors – a position Global Witness has criticised for allowing some of the biggest and best resourced players to act with impunity.
Member States have also backed a text would ensure companies are not liable for environmental harm and failed to include climate requirements for corporate activities. The European Commission did not include climate due diligence requirements, and instead proposes that their inclusion would be considered seven years after the Directive comes into force - so at least a decade from now, in 2032, despite clear warnings on the need for urgent action and mounting evidence of climate breakdown around the world.
The range of human rights conventions covered by the text was also narrowed – including removing conventions on children’s rights – and the application for other international law standards was significantly limited.
The European Parliament will agree its position in early 2023 with a series of Committee votes between January and March and a final vote in May, ahead of negotiations with the Council and Commission on the final law.