UN Working Group on Business and Human Rights preliminary assessment of EU draft due diligence directive
The Working Group is glad to see that a draft of a new Directive on corporate sustainability due diligence has been published and looks forward to the dialogue that will take place. We are all working towards the same broad goal of addressing harms to people, and the planet which sustains us all, and to do so in a way that puts rights holders at the centre of a resilient economic order. The Working Group will, of course, submit more extensive comments but wanted to share some preliminary messages today...
First, the Directive should align with the UN Guiding Principles, as part of a larger goal of policy coherence. This is not only to create coherence among EU Member States but also with the laws and processes under consideration in other parts of the world. To create new norms, that are inconsistent, or which lower the threshold, would bring us backwards not forwards...
Second, the scope of application of the current proposal is limited and not fully aligned with the UN Guiding Principles, in addition to placing a threshold in terms that limits general application of the Directive to “very large” companies. Furthermore, the current draft encompasses only a select group of “large” companies in only three sectors - textiles, agriculture, and extraction of minerals. The decision to exclude other sectors from this category means that companies that may not be large but that may be linked to significant adverse impacts (e.g. technology firms that design and export software, professional services, renewable energy firms, defence/arms brokers) may be excluded from the proposed Directive. There is also no clear reference to state owned companies, missing the opportunity for States to lead by example, by applying due diligence requirements to their own companies. While there may need to be a phased-in approach, the blanket exclusion of a large proportion of business entities, means that there is not as of yet a full ambition of levelling the playing field...
Third, the Working Group’s Roadmap for the next decade of action emphasizes that States need to “clarify that meaningful and ongoing consultation with potentially affected groups and other relevant stakeholders is integral to human rights due diligence”. The current draft Directive does mention engagement with affected rights holders but does so in a way that is inconsistent with the UN Guiding Principles. Draft Article 6 for example states that “Companies shall, where relevant, carry out consultations with potential affected groups including workers and other relevant stakeholders.”
Companies should embed ongoing stakeholder and rights holder engagement as part of any due diligence obligation. This should never be optional. There is no specific mention of vulnerable populations who may be particularly affected by corporate abuse (e.g. indigenous peoples or communities of African descent), including their right to be consulted, protected as human rights defenders and provided with adequate mechanisms that facilitate their access to remedy. Additionally, the gender perspective is completely absent...
Fourth, the scope of the draft Directive in terms of the nature and extent of human rights due diligence, is also inconsistent with the UN Guiding Principles and is narrow...
Our final points relate to the important need for the draft Directive to address access to remedy and civil liability. While it is important for the Directive to have provisions for victims to seek access to remedy, the current draft is still in need of improvement. The current draft does not advance access to remedy in terms of removing many of the structural barriers that have been identified by the European Union Agency for Fundamental Rights, the Council of Europe, OHCHR and the Working Group itself, where barriers including issues of burden of proof, statutes of limitations, collective redress, and other procedural barriers create real barriers to access to an effective remedy.