Call for meaningful HREDD legislation in Europe

‍Our key takeaway: Companies – large and small, investors and business associations issue an urgent call to the European Commission: they want mandatory human rights and environmental due diligence, they want it now, they want it to apply to all companies and full value chains, and they want it to be meaningful, grounded in stakeholder engagement and have teeth. In short: follow the UNGPs and OECD Guidelines.

Over 100 companies, investors, business associations and initiatives released a joint statement calling on the European Commission to urgently adopt a legislative proposal on mandatory human rights and environmental due diligence:

• “deeply concerned by the serious delay”: “We, the undersigned, are deeply concerned by the serious delay in the publication of the EU Commission’s proposal for mandatory human rights and environmental due diligence (mHREDD), within the Sustainable Corporate Governance initiative. We therefore urge the European Commission to adopt a legislative proposal without further delay.” The signatories note that they “remain convinced that the mHREDD legislation can bring about a paradigm shift if it succeeds in driving better outcomes for people and planet across globalised value chains.” They note that “[w]e firmly believe that strong and ambitious EU legislation would make a tangible contribution to improving human rights and environmental conditions along global value chains, while helping businesses become more resilient and future-oriented.”
• Full alignment with the UNGPs needed – including on scope of law and due diligence obligation:The signatories state that “it is critical that requirements fully align with the international standards of the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.” When it comes to the companies subject to the law, the signatories note that businesses should be covered “regardless of size.” Specifically, “[t]he legislation should introduce an adaptable framework that sets an ambitious standard of conduct, and requires the widest possible range of businesses to reach it. Rather than excluding smaller EU companies, the legislation should ensure proportionality by anchoring the HREDD requirement in the UNGPs and OECD Guidelines’ understanding that, while the responsibility to respect human rights and the environment applies to all businesses, the means through which a company meets this standard will vary according to its size and the severity of its impacts, among other factors.” The signatories further remind the European Commission that the “legislation should oblige businesses to carry out ongoing due diligence proactively and across all their operations and the full value chain.” They discuss the UNGPs’ approach to differentiated expected actions (depending on the mode of involvement) as well as the possibility of prioritising based on the salience of the issues identified (to support companies with this full value chain approach).
• Meaningful legislation which moves beyond tick-box: the signatories elaborate on other principles that would support the law in “mak[ing] a tangible contribution to improving human rights and environmental conditions along global value chains, while helping businesses become more resilient and future-oriented.” Specifically, the law should “avoid a tick-box approach” and “drive meaningful action on impacts on people and planet.” This includes looking beyond audits and contractual or commercial leverage, as well as embedding human rights due diligence in appropriate governance and accountability structures. The law should also ensure “meaningful stakeholder engagement.” Specifically, “robust engagement with affected groups, workers and other relevant stakeholders including unions and human rights and environmental defenders should inform all stages of the required due diligence process.” Finally, the law should provide for credible accountability mechanisms, i.e. strong “legal consequences – encompassing administrative penalties and provisions for civil liability.”