RADICAL REALIST

A new dawn for business and human rights

The time is right for this new EU Directive on how companies impact people and planet, by Anna Triponel

20 years ago, I left my law school in France deflated and disappointed. I had just been told by my professors that my master’s thesis on what international human rights law meant for companies was not a valid topic since, “companies are not subjects of international law.” Human rights law – a newer body of international law that emerged in response to the atrocities of World War II – was viewed at the time as solely for governments.

In the 1980s and 90s, however, we started to see a string of cases shining the light on the failure of the existing model, where human rights respect by corporates depended solely on countries’ national laws and their enforcement. The 1984 Bhopal disaster in India, in which a chemical company’s gas leak killed thousands; the arrest and execution of human rights activists in 1995 in Nigeria after they were signalled to be a “problem” by an energy company; the finding in the 1990s that thousands of children were stitching footballs full time for World Cup tournaments.

These cases – alongside many others – got the world thinking. What do human rights have to do with companies? Surely there was a middle ground between the prevailing all (companies should be subject to the same human rights obligations as governments) or nothing (it’s all on governments’ shoulders to regulate companies)?

This question led the United Nations’ Secretary General at the time, Kofi Annan, to appoint Harvard Kennedy School professor John Ruggie as Special Representative on Business and Human Rights. Ruggie and his team, which I was privileged to be a part of, worked to forge an international consensus. Although there were hundreds of stakeholders from a wide range of countries and  groups involved in this process, the consensus forged was remarkably simple: people should not be worse off because a company exists. It is not on companies to take on the duty of governments to promote, protect and fulfil human rights, but it is on companies to seek to ensure that the human rights of workers, neighbouring community members, customers, and others linked to their business are respected.

This consensus of companies’ responsibility to respect human rights, alongside the expectation that companies conduct human rights due diligence to meet this responsibility, became soft law when the international community (represented by the UN’s Human Rights Council) endorsed the UN Guiding Principles on Business and Human Rights in 2011. Since that time, we have seen the legal frameworks that seek to prevent human rights impacts in global supply chains grow in leaps and bounds: modern slavery acts have passed to enhance disclosure on how companies are preventing forced labour; import bans have been put in place to prevent goods from being imported if adequate human rights due diligence has not been conducted; and due diligence has been transformed into legal duties and obligations. But this year, 2024, will go down in history as the start of a new era for companies and their respect for people and planet. The European Union is passing a law that will require large companies to conduct human rights and environmental due diligence, and to adopt and implement a climate transition plan.

The passing of the EU Corporate Sustainability Due Diligence Directive marks a new dawn for business and human rights. A new dawn in which companies look at their impacts on people and planet alongside impacts to their balance sheet. Alongside other measures, companies will now need to pay attention to a full list of international human rights, biodiversity and environmental standards. They will need to put in place new policies and risk management systems. They will need to engage pro-actively with people to see things from their perspective. They will need to ensure that people have channels to raise grievances and concerns directly. They will need to have systems in place to prevent and address impacts – and provide remedies when impacts do occur. They will need to measure the effectiveness of the actions they take, and communicate publicly about their efforts. They will need to implement a science-based climate transition that looks to limit global warming to 1.5C.

Yes, the law places a high bar on which companies are subject to these obligations: it applies to EU companies with over 1,000 workers and a global turnover surpassing €450m, plus non-EU companies generating €450m turnover in the EU. At the same time, history has shown us that legal obligations start to shape entire industries, as they are translated into contractual and investor expectations. And yes, the law excludes certain downstream business partners from its scope. However, upstream business partners are firmly in scope, and companies are expected under other legal regimes to look at the impacts of downstream activities, like recycling, landfilling and dismantling. So, although last-minute political discussions weakened the coverage of the law, it is still able to reach its stated objective of ensuring that companies contribute to the transition to a sustainable economy in a way that is grounded in meaningful environmental and human rights due diligence.

The time is right for this law. We are in the midst of a climate, nature and inequality crisis. Companies are facing a very uncertain future ahead. We will see an increase in climate-related migration – leading to a growth in vulnerable people and forced labour in company supply chains. We will see an increase in worker heat stress – impacting health and lives, alongside productivity and livelihoods. We will see a decline in democracy – jeopardising the ability of workers and community members to speak up when things are not right. Yet this law provides us with a level playing field for companies to navigate the rapidly changing world ahead.

Now the Directive has finally been passed by the Council of the EU. At its session in late April, the European Parliament must pass it into law. There is no better time for the soft law of yesterday to become the hard law of today to equip companies to navigate the world of tomorrow.

Anna Triponel is an internationally renowned business, human rights and climate expert and founder of Human Level.

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