In 2019, the Corporate Justice Coalition launched a campaign for a UK-specific Business, Human Rights and Environment Act (BHREA). This campaign emerged from the recognition that voluntary measures and existing regulations were insufficient to prevent and address corporate abuses of human rights and environmental standards. The BHREA seeks to prevent human rights and environmental abuse by requiring companies to proactively identify, prevent, mitigate and remedy adverse impacts across their operations and value chains through due diligence.

Meanwhile, the EU has officially passed and published the Corporate Sustainability Due Diligence Directive (CSDDD), marking a significant step forward for corporate accountability. However, following significant lobbying and a series of last-minute carveouts, the CSDDD has several critical shortcomings. These limitations highlight how the UK can learn from the EU’s experience and adopt a tailored BHREA that builds on an existing British model to create a comprehensive and effective framework.

Scope: Ensuring comprehensive coverage of companies

Company size

One of the primary criticisms of the CSDDD is its limited scope regarding company size. The final text of the directive raised the original thresholds, applying only to EU companies with over 1,000 employees and a net worldwide turnover of €450 million, and non-EU companies that generate such turnover within the EU market. Nearly 70% of EU companies originally expected to be covered will not face accountability for their impacts on human rights and the environment.

For the BHREA to be effective, it must include a broader range of companies, including small and medium-sized enterprises (SMEs), which the CSDDD stops short of covering. This approach ensures all businesses, regardless of size, are held accountable for their impacts. It would protect smaller companies from unreasonable burdens and ensure that a company’s level of responsibility is relative to its size and influence by using the principles of reasonableness and proportionality.

Value chain: Covering all downstream activities

The CSDDD requires companies to conduct due diligence on their operations, subsidiaries and direct and indirect suppliers following a risk-based approach. However, when it comes to downstream business partners after a product or service has left the company, the law only expressly includes impacts arising from their distribution, transport and storage activities for or on behalf of the company—likely allowing considerable risks to go unaddressed.

The BHREA would mandate comprehensive value chain due diligence, covering all activities from raw material extraction to end-user disposal—ensuring that companies identify and mitigate risks at every stage. This approach is essential for addressing complex global value chains and preventing adverse impacts on human rights and the environment.

Inclusion of the financial sector’s core activities

The exclusion of the financial sector’s downstream activities from the CSDDD is a significant oversight, given the pivotal role financial institutions play in supporting and financing business activities. Art. 36 (1) of the Directive mandates that the Commission evaluate the need for additional sustainability due diligence requirements for regulated financial undertakings; however, this evaluation is part of a two-year review process.

The BHREA would explicitly include financial activities within its scope, requiring banks, investors and other financial entities to conduct due diligence on their clients and investment portfolios. This would ensure financial institutions are held accountable for their contributions to human rights abuses and environmental degradation—driving systemic change across the financial industry.

Liability: Strengthening accountability measures

Burden of proof

Access to justice and liability provisions are crucial for ensuring victims of corporate misconduct can seek redress and hold companies accountable. Despite important contributions to tackling a number of long-standing barriers to access to justice, the CSDDD still lacks provisions for the reversal of the burden of proof and unduly complicates civil liability rules.

The BHREA would incorporate the "failure to prevent" model from the UK's Bribery Act, which shifts the burden of proof onto companies to demonstrate they took adequate measures to prevent harm. Businesses conducting genuine due diligence are better positioned to present the necessary evidence. This approach not only relieves affected communities of this burden but also makes the process more efficient and effective, addressing significant power imbalances and fostering a culture of meaningful corporate responsibility.

This model has been recommended by Parliament’s Joint Committee on Human Rights and deemed legally feasible by the British Institute of International and Comparative Law. Integrating this model into the BHREA would be a particularly suitable way to ensure resources are used for meaningful due diligence rather than a 'tick-box’ exercise, allowing companies to tailor their processes to their specific needs.

Directors’ duties and criminal liability

The CSDDD lacks explicit provisions for directors’ duties or criminal liability—weakening its potential for ensuring accountability. The BHREA would incorporate specific responsibilities for directors and establish criminal liability for corporate leaders, holding them personally accountable for their company's actions.

Directors would be required to take all reasonable steps to ensure their companies implement and adhere to due diligence processes—including overseeing and verifying that human rights and environmental standards are met throughout the company’s operations and value chains.

The BHREA would establish criminal liability for serious offenses committed by individuals with decision-making power within a commercial organisation. Companies could be found guilty where individuals commit serious crimes, such as murder, kidnapping, or modern slavery, to obtain or retain business advantages for the organisation.

Conclusion

The campaign for a UK BHREA underscores the urgent need for robust and comprehensive legislation that reflects the strengths but avoids repeating the shortcomings of the EU's CSDDD. By broadening the scope and enhancing liability provisions, the BHREA can set a new global standard for corporate accountability. Such a law would not only protect human rights and the environment but also promote sustainable and responsible business practices, benefiting society as a whole.

By Dakota Anton, Corporate Justice Coalition

To learn more about the UK campaign for a BHREA or to show your support, please sign the petition for a new law here.