Consultation for an Initiative on Sustainable Corporate Governance – Citizen tool response template

Please provide reasons for your answer:

Please explain:

Companies must be obliged to respect human rights and the environment, in their own operations, subsidiaries and global value chain, including supply and subcontracting chains. This is the reason why the EU needs to table an EU binding legislation on corporate due diligence. In particular:

• Companies must comply with human rights and environmental due diligence obligations.
• Due diligence processes must ensure respect for human rights, which include workers’ and trade union rights, including for example Freedom of Association and Collective Bargaining.

The EU should also engage constructively in the negotiations for an ambitious UN Treaty on Business and Human Rights.

Other, please specify:

EU legislation should also, and most importantly, empower victims and their representatives, including trade unions and NGOs, to fight against human rights abuses. It should ensure the right for trade unions to bargain collectively, the full involvement of workers’ representatives in the whole due diligence process, as well as the consultation (and, where applicable, consent) of all relevant stakeholders. In particular:

• Trade unions should have the right to negotiate with the company the due diligence process at the different levels.
• Workers’ representatives should be informed and consulted in the different steps of the due diligence process.
• Early alert mechanisms should be developed in partnership with the trade union in the companies concerned.
• Stakeholders should be informed, consulted and involved as well in the due diligence process.
• Due diligence processes must ensure respect for indigenous peoples’ and local communities’ rights (in particular the right to Free, Prior and Informed Consent).

Other, please specify:

None of the above.

other interests, please specify:

Please explain:

Please provide an explanation or comment:

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Please explain:

Please describe examples:

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Please describe:

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Please explain your answer:

Although fully agreeing with the necessity of giving a role to stakeholders in the enforcement, it has to be stressed that it will also be necessary to ensure that this role is given to genuine representatives of workers, environment or people affected by the operations of the company and not to so-called “yellow” organisations/representatives set up and/or financed by the companies thereby undermining the prerogatives of trade unions/recognized organisations/representatives. As for the representation of workers this means that such role is only for genuine trade unions and cannot be given to yellow trade unions and/or so-called associations of persons/employees.

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Yes, I agree with this definition. However, it is worth stressing the definition should align its wording with international due diligence standards. Prior to ceasing, preventing, mitigating and accounting for human rights, health and environmental impacts, companies should first be obliged to effectively identify and assess any actual or potential adverse human rights, social, health and environmental impacts. Furthermore, the “due diligence duty” should include a remediation duty, that is, the obligation to actively engage in the remediation of adverse impacts where companies cause or contribute to harm by way of actions or omissions, or, where a company has not caused or contributed to the harm but its operations, products or services are directly linked to it, the obligation to exercise or increase its leverage over those responsible to help ensure that remediation is provided.

Moreover, the “due diligence duty” should cover the company’s global value chain, which includes entities with which it has a direct or indirect business relationship and which either (a) supply products or services that contribute to the company’s own products or services, or (b) receive products or services from the company. Supply chains and value chains are similar terms that refer to the entire production chain. However, while “supply chain” may be used to specifically refer to the production and distribution of a commodity, “value chain” includes the whole set of interrelated activities by which a company adds value to an article.

Please specify:

The EU directive should apply to all businesses, including multinational enterprises, regardless of their size and sector. Limitations in the scope of the EU directive would exclude many companies whose operations have significant actual or potential adverse impacts in the areas covered by due diligence obligations.

EU law must clearly establish that due diligence is a continuous, preventative, risk-based process through which all business enterprises must effectively identify and assess; cease, prevent and mitigate; track and monitor; and communicate and account for specific risks and actual and potential adverse impacts in their operations and along their global value chains and business relationships.

The due diligence duty must be focused on the risks and harms not to the enterprise itself but to human rights and the environment, and its extent must be determined by the likelihood and severity of the adverse impacts, and should be regularly re-assessed and adapted to ensure appropriateness and effectiveness. The effectiveness of due diligence is measured by the extent to which actual and potential harm is prevented and mitigated.

A rich body of legally binding international human rights and labour standards has long been developed, leaving no room for legal uncertainties. Although not as straight-forward as human rights standards, environmental standards - often addressed to states - can also be translated into concrete obligations for companies. When laying down due diligence requirements and stipulating corporate liability for harm, EU law should specify the protected environmental goods and the expected standard of business conduct in this regard. This would guide companies when they conduct due diligence, and administrative and judicial authorities when determining liability. Existing international due diligence standards already constitute a useful reference in this regard.

Other, please specify:

The material scope of the EU directive should cover all human rights, including workers’ and trade union rights. This includes, amongst others, freedom of association and the right to collective bargaining and collective action, information, consultation and board-level representation rights, decent working conditions, occupational health and safety, fair wages, social security coverage, etc.

Due diligence obligations should also cover social, health and environmental impacts, as well as anti-corruption, corporate governance and tax matters.

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Third country companies placing products on or/and providing services within the EU internal market should be subject to the same obligations as companies established in the EU.

These companies must also be obliged to respect human rights and the environment, in their own operations, subsidiaries, business relationships and global value chain, including supply and subcontracting chains. These companies must also be liable in case of/for any human rights and environmental abuses, including workers and trade union rights abuses in their operations or value chains, (without prejudice to other subcontracting and supply chain liability frameworks). Governments must set up robust enforcement mechanisms, with effective sanctions, to ensure that these companies also obey the law.

Please explain:

The due diligence duty of third country companies should be accompanied by broadening jurisdiction of EU Member States courts.

To create a level playing field globally, the EU should also engage constructively in negotiations for an international legally binding instrument to regulate the activities of transnational corporations and other business enterprises. This treaty should include enhanced provisions on access to justice for victims in third countries, including on jurisdiction, applicable law, rights of victims and liability.

EU trade policy should also contribute to ensure the respect of human rights, including workers and trade union rights, and of social and environmental objectives in companies’ activities and in their business relationships and value chains. It should inter alia contribute to ensure that effective due diligence policies are implemented by companies and that comparable legislation on due diligence is introduced in third countries.

Please provide explanation:

Companies must be liable in case of/for any human rights and environmental abuses, including workers and trade union rights abuses in their operations or value chains, (without prejudice to other subcontracting and supply chain liability frameworks). In particular:

• EU legislation must make EU companies liable for harms committed at home or abroad in their direct operations or by operations in their global value chains.

• Liability must be imposed for harms caused or contributed to by EU companies in their global value chains, as well as for failure to conduct adequate due diligence.

• In any case, EU legislation shall not impact on other subcontracting and supply chain liability frameworks established at national, European and international level (e.g. joint and several liability in subcontracting chains).

• Companies’ duty of care and corporate due diligence are two separate and complementary duties. Companies shall not be able to escape liability by arguing that they have respected due diligence obligations.

Governments must set up robust enforcement mechanisms, with effective administrative sanctions, to ensure that companies obey the law. In particular:

• Competent authorities must have the mandate to investigate potential infringements and impose sufficiently dissuasive and proportional sanctions on them.

Victims of corporate abuses must have access to courts - in their own country and in the country where the parent or lead company is based or operates - and the rules of the (court) game must be made fairer for victims. In particular:

• Law must allow victims from third countries to choose whether to use the law of the home or host state when bringing a case against a company.

• Law must put an end to placing the burden on victims to prove companies are responsible. Instead, it must require companies to disclose any relevant evidence lying in their control, particularly regarding their connection to the harm and their due diligence process.

• Law must require companies to disclose the names, locations, and other important information of their global subsidiaries, suppliers and business partners. Global supply chain transparency directly improves victims’ ability to access remedy.

• Law must ensure that victims have enough time to bring claims for damages before EU courts.

• Law must ensure that trade unions and NGOs can bring collective actions on behalf of

In case you answered yes, please indicate what type of difficulties you have encountered or have information about:

Victims of corporate abuse frequently face many obstacles (legal, procedural and practical) in attempting to hold European companies liable for the harm caused by their subsidiaries or supply chain partners located in a third country.

The Boliden case is a good example of this. In the 1980s, Boliden paid Promel to export industrial waste to Chile, where Promel disposed of it without removing the arsenic. This caused awful health effects, including cancers and neurological disorders, for people living near the site. In 2013 victims took legal action against Boliden in the Swedish courts arguing that Boliden had breached a duty to ensure that the sludge was appropriately processed by Promel, but eventually lost their case. In March 2019, after the claimants appealed, the court decided to apply Swedish law and dismissed the appeal on the basis: that the claim for damages had been filed too late and the cause of action was time-barred. Boliden has not faced legal consequences for this negligence.

The KiK case led to a similar outcome. On 11 September 2012, 258 workers died and hundreds were seriously injured when a fire broke out in the Ali Enterprise garment factory in Karachi, Pakistan. Due to lax fire safety measures, workers were at first unaware of and then trapped by the fire. At the time, the factory was producing jeans for its main client, German retailer KiK. Victims sought justice in the German courts, but the court decided to apply Pakistani law, as this was where the harm occurred, and dismissed the action, deciding that according to Pakistani law the statute of limitation had expired and the claimants were too late to seek justice.

The Shell case is further proof of said obstacles. Shell is ravaging the Niger Delta through its decades-long quest for oil. Pollution caused by the activities of its subsidiary SPDC is having a devastating effect on both the ecosystem and people living in this area. Victims of Shell’s irresponsible business conduct sued the company before Dutch courts, but claimants have faced endless legal barriers, challenges and uncertainty. They still have not won justice. The story has exposed the weakness of current EU law in allowing victims of corporate harm effective access to remedy and justice. In current law, parent companies like Shell are unlikely to be held liable for the activities of their subsidiaries.

If you encountered difficulties, how and in which context do you consider they could (should) be addressed?

Barriers to justice have prevented victims, like those in the Boliden, KiK and Shell cases, from obtaining remedy.

EU laws and rules on jurisdiction should allow for the liability of parent and lead companies in the EU for harm caused by their subsidiaries or value chain partners located in a third country, without prejudice to other liability frameworks for supply or subcontracting chains.

Victims seeking justice have a limited ability to uncover the information that is necessary to establish a parent or lead company’s liability. Victims should not have to take on the burden of proving the EU parent or lead company’s alleged failure and its connection to the harm they suffered, but rather the EU parent or lead company should be required to prove it took all due care.

EU law currently dictates that cases must be considered under the law of the country where the damage occurred. In seeking the right to claim compensation, victims should be able to rely on EU law.

EU legislation should also provide for reasonable time limitations for bringing legal actions in order to allow foreign victims sufficient time to file a lawsuit in EU courts.

Please explain.

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If so, please specify:

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