Corporate sustainability due diligence—the time is now

After protracted battles, a directive on corporate sustainability due diligence is finally ready for endorsement.

Europe’s supply chains are scattered all over the globe: our chocolate comes from Ivory coast and our coffee from Brazil; our clothes have been fabricated in Asia and the spare parts of our mobile phones come from all around the world. Control over such large supply chains is easily lost—possibly even on purpose, as companies tend to take advantage of the humanitarian situation of countries with poor living and working conditions to produce more cheaply.

Chocolate? It is estimated that around 1.6 million children between the ages of five and 17 work in cocoa production in Ghana and the Ivory Coast. Coffee? Together with palm oil, it is one of the biggest drivers of deforestation. Clothes? The collapse of the Rana Plaza building in Dhaka, Bangladesh, in 2013 claimed the lives of 1,134 people, many of whom were women. This disaster stands as a tragic testament to working conditions in the global garment industry, shedding light on its precarity, long working hours, low wages and inadequate safety measures.

Fair and humane

European citizens want to be sure that goods and services have been produced and delivered under fair and humane living and working conditions, without child or forced labour or damage to the environment. Labour should not be a commodity: workers and trade-union rights are human rights, which are not tradeable. Businesses should be accountable for the adverse impacts of their operations on workers, communities and the environment.

This is precisely why trade unions and civil society are calling for legislation requiring due diligence on human rights in companies’ value chains. France took the first step in 2017; Germany followed in 2021. The European Union is on the verge of EU-wide legislation with the directive on corporate sustainability due diligence due to be adopted by the European Parliament tomorrow.

The directive aims to promote sustainable corporate governance across the EU, ensuring the protection of human rights by mandating companies to detect and prevent abuses in their operations and value chains. Furthermore, it seeks to safeguard the environment by identifying and preventing environmental harms caused by business activities. The directive will enhance transparency and accountability by requiring companies to report on their sustainability performance and respect for human rights, and ensure that stakeholders such as trade unions and workers’ representatives are involved in developing, implementing and monitoring due-diligence policies, plans and strategies within the company.

Watered down

The directive has been welcomed by plenty of companies and business associations, as it will separate the wheat from the chaff when it comes to fair competition. Indeed many companies (among them a German supermarket chain and a Swedish furniture manufacturer) have spoken out in favour of a far more ambitious directive, in line with the United Nations Guiding Principles on business and human rights: it should apply to all sectors and should require prevention, mitigation and remediation of impacts also after the product/service is delivered or manufactured (‘downstreaming’), it should closely involve stakeholders and it should protect victims of harm through civil liability. All of these elements have alas been been watered down to the lowest common denominator by the Council of the EU—but still we are on the verge of having a directive.

Opposition has come from some business organisations, claiming ‘unworkable reporting requirements’—showing how little understanding they have of the reality of businesses on the ground, for whom reporting across all of their operations is essential for good governance. And to dismiss the urgent necessity to respect human rights in complex global supply chains is to put profits before people and planet.

Corporate sustainability due diligence is perfectly feasible—there are enough examples out there. A company that can determine the carbon footprint of its product should be able to ensure that that product is manufactured under decent working conditions. Indeed, this should be thought of as an investment, not a cost. In a globalised economy, not only is it imperative effectively to protect human rights and the environment in supply chains but in addition the directive will provide a competitive advantage for European businesses by addressing ethical consumption demands.

Over a decade after Rana Plaza, unfortunately not much has changed in the textile industry. Salaries are still not paid and trade unions are still suppressed. The French law, which was famously known as the ‘Rana Plaza law’, also fails to fulfil its purpose, as most of the companies whose clothes were found in the factory ruins are not covered by the law.

It is high time to take the next step to assert human rights. The European Trade Union Confederation calls on the European Parliament to adopt the directive and lay the foundations for mandatory human-rights due diligence, and generally responsible business conduct, in the European Union.