New business sustainability law must be strengthened to protect human rights

New legislation governing the human rights and environmental obligations of businesses in the EU, known as the Corporate Sustainability Due Diligence Directive, risks being undermined by exemptions and loopholes, Amnesty International said today.

A new report issued today, Closing the loopholes: Recommendations for an EU corporate sustainability law which works for rights holders, identifies several serious gaps in the proposed legislation, which is due to be voted on by the European Parliament on 1 June, before final negotiations between the EU’s governing bodies begin later next month.

Hannah Storey, Amnesty International’s Policy Advisor on Business and Human Rights, and the author of the report said:

“This new law could set a legal benchmark and protect people in Europe and beyond from corporate harms, closing a legislative gap which has allowed companies to perpetrate widespread rights abuses around the world and escape accountability.

“Yet the scope of the law as it is currently framed by the European Commission and EU member states is too narrow. It will fail to halt abuses related to the end use of many products, such as rubber bullets and other law enforcement equipment, which could still be exported to police or security services outside the EU and used to commit abuses.

“The legislation fails to sufficiently address the impact of businesses on climate change. It compels large companies to adopt climate mitigation plans but contains no obligation to implement them. Neither does it hold them liable for harm they may cause to the climate, despite climate change being fundamentally a human rights issue.

“Amnesty International urges EU lawmakers to strengthen what was proposed by the Commission and member states, and to develop strong legislation to halt corporate harm and support victims in accessing justice.”

Barriers to justice heightened by gender and race

Victims of human rights harm have a right to effective remedy. The Corporate Sustainability Due Diligence Directive (CSDDD) will create an urgently needed route to remedy for victims of corporate-related harm, but it does not address the barriers victims face when trying to access justice.

Hannah Storey said: “When Indigenous Peoples, workers in garment supply chains, poor farmers, and human rights defenders confront massive corporate power and influence, the scales of justice are not balanced.

“This directive could vastly improve access to justice but the legislation fails to address existing barriers such as high costs and a lack of access to information, which means victims are more likely to remain without remedy.”

Missing links in the value chain

The CSDDD requires companies to conduct human rights and environmental due diligence in relation to their own operations, and to their value chain.

Under international standards, the value chain normally refers to the full range of activities required to create a product, including the extraction of raw materials, and the use of a product or service.

The ‘use of products’, however, has been removed from the CSDDD’s definition of the value chain.

“Limiting the definition of the value chain that companies are required to assess as part of their human rights and environmental due diligence, including a failure to account for the final use of their products, is likely to result in significant human rights abuses,” said Hannah Storey.

For example, in My Eye Exploded, Amnesty International exposed how rubber bullets manufactured in France were used by Lebanese security forces to target and injure peaceful protestors in 2019 and 2020.

“The legislation should ensure companies assess their entire value chain for human rights and environmental risks so that appropriate action can be taken to address them,” said Hannah Storey.

Exemptions for financial institutions and export controls

Financial institutions in the EU are currently exempted from elements of the CSDDD, even though they are known to have funded clients who caused or contributed to grievous human rights abuses.

“The legislation should apply to all companies across all sectors, including financial institutions, which should be required to conduct human rights and environmental due diligence just like any other business covered by the legislation,” said Hannah Storey.

Further exemptions apply to sectors subject to export controls, such as weapons and surveillance technologies.

Hannah Storey said: “Amnesty International believes export controls are not an adequate substitute for human rights-based legislation. Companies producing items governed by export controls should still be required to conduct human rights and environmental due diligence under the CSDDD.

“People around the world have suffered horrendous harm as a result of the misuse of weapons and surveillance technologies, despite the existence of export controls on these products.”