Our key takeaway: Discussions regarding what it means to conduct meaningful stakeholder engagement, how to regulate adverse impacts on the environment and modes of liability within the upcoming EU law are progressing.
In April 2021, Global Witness (GW) released its policy briefing Holding Companies to Account: How a new EU law can help create a more sustainable future which includes a number of recommendations for the upcoming EU corporate accountability legislation. These include:
- The importance of meaningful stakeholder engagement, which should include a number of components. GW confirms the need for ongoing stakeholder engagement (e.g. regular meetings with stakeholders), before and during the course of the project or business activity, and involving all persons or groups that are directly, indirectly or potentially affected by the activities. Specifically, GW notes that stakeholder engagement should seek to address the inherent power imbalance between the company and the affected persons or groups; should aim to understand how existing contexts and or vulnerabilities may create disproportionate impacts on certain groups; and should implement a gender-based approach and recognise the right of indigenous peoples and communities to free prior and informed consent
- The need to define adverse environmental impacts for companies, with a requirement to apply key principles of environmental law. GW underscores that, in contrast to the field of human rights, there is no comprehensive body of international law or standards on the protection of the environment. In addition, international environmental law generally creates obligations for States, with many instruments focusing on specific geographical areas. GW notes that national laws often fail to provide adequate levels of protection, and that international legal instruments (e.g. Paris Agreement, Convention on Biological Diversity) should be translated into business obligations. Specifically, the EU law should define adverse environmental impacts (in consultation with stakeholders) and require the application of key principles of environmental law (while ensuring that both direct and indirect emissions are included in adverse climate impacts)
- The need to provide for a combination of civil, administrative and criminal liability – with a number of parameters that would enable remedy for victims. GW discusses civil, administrative and criminal liability that would apply to different scenarios. Specifically, GW notes that actions and omissions should be able to form the basis for liability; successful implementation of due diligence should not absolve companies from liability; joint and several liability for both human rights and environmental harms should be established; administrative or criminal proceedings should not preclude civil claims, and vice versa; victims outside of the EU should be able to access EU courts; the burden of proof should be reversed; limitations periods should be extended; and financial support for victims should be included.
For more, see Global Witness, Holding Companies to Account: How a new EU law can help create a more sustainable future (April 2021)
