Analysis: The European Parliament is set to vote this week on reducing the scope of a directive on human rights and environmental due diligence
Corporations are closely connected with our daily lives. They produce our clothes, our furniture, our food and our energy. But behind everyday products is a vast and complex supply chain. Large companies have made large profits from this supply chain, without necessarily taking responsibility for associated adverse impacts on people and the environment. There is a long history of human rights and environmental disasters occurring deep in multinational supply chains, for example the oppression of the Uhygur people shown in RTE's recent Forced Fashion documentary.
Decades of work from human rights and environmental activists led finally in 2024 to an EU law: the Corporate Sustainability Due Diligence Directive. This week, however, the European Parliament will vote on significantly reducing the scope of the law in the name of EU competitiveness. Not only will this make the directive a "toothless box-ticking exercise" as WWF suggests, it is also a lost opportunity for justice for human rights defenders worldwide.
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From RTÉ Radio 1's Morming Ireland, RTÉ Investigates journalist Joe Galvin outlines how some of Ireland's largest retailers are exposed to forced labour cotton
Thousands of communities globally are engaged in defending the environment and human rights in struggles closely connected with large corporations. In Columbia, huge tracts of forest are harvested by companies, including Irish packaging multinational Smurfit Kappa. Local communities say that this industry has taken the land they need for growing food and has caused significant environmental damage.
Communities in Zacatecas in Mexico have long been campaigning against the proposed Milpillas dam, which the government says would improve water access and quality. But the community believe the dam is actually designed to provide water to the large mining and beverage companies in the region, such as ABInBev, the Belgian brewers of Budweiser and Corona, and will divert water away from their crops in this already water-stressed area.
There is also a growing campaign against Airbnb, which has its European headquarters in Dublin, and other accommodation providers who are letting accommodation in illegal Israeli settlements in the West Bank. Airbnb is facing related legal action in both Ireland and France.
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Ó Raidió na Gaeltachta Nuacht a hAon, tráchtaire atá lonnaithe i Barcelona Cathal Ó Cuaig ag caint faoi na fadhbanna le AirBnB sa Spáinn
The EU directive as originally proposed would have required large companies with over 1,000 employees and €450m turnover to conduct human rights and environmental due diligence. In practice due diligence means regular assessments of suppliers to ensure fair working conditions, including (but not limited to) protecting human rights, supporting a living wage, preventing the seizing of land and displacement of peoples, protecting against gender-based violence, fair prices for small producers such as farmers and preventing environmental degradation.
The original directive also made efforts to support an important human rights principle, namely access to remedy, proposing to give victims of human rights abuses better access to justice, with companies liable for damages of at least 5% of global turnover. The directive proposed to harmonise civil liability legislation across member states, giving more consistent access to remedy across the EU.
But the revised Directive will significantly reduce its scope. It will apply only to companies with over 5,000 employees and €1.5 billion turnover, reducing the number of Irish companies impacted from 76 to a handful. Civil liability will remain the role of member states, a system which has proved unsatisfactory for human rights defenders and victims.
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From RTÉ Radio 1's Today with Claire Byrne, what is greenwashing - and how do you spot it?
This gutting of the directive and other sustainability reporting legislation was achieved through a political sleight of hand driven by the influence of far right MEPs, who make up approx 27% of the Parliament. Last month, the EU’s legal affairs committee agreed on the revised terms after a controversial negotiation process which was widely seen as a concession to the far right. The resulting proposal is weaker than both the Commission’s Omnibus proposal in February and the Council’s July proposal.
Chief arguments for the regulatory rollback are cost reduction for companies and competitiveness for the EU. The latter is geopolitically driven. The directive would impose obligations on "third countries" with over €450 million turnover in the EU, a clause which led Donald Trump to raise the directive as an issue during trade discussions this summer. US oil company ExxonMobil has lobbied hard against the directive and specifically asked Trump to intervene to block it.
The cost and administrative burden of increased regulation has been put forward by many businesses and industry lobby groups and, with some justification, by SMEs. However there are also companies and groups, including investors, who have called for increased supply chain transparency.
There is still time to avoid a huge step back for human rights and corporate responsibility
Rolling back the directive means that we are relying on companies to voluntarily adopt and implement due diligence policies and practices. While there have been major advances in voluntary corporate action and disclosure, it has not been enough to address supply chain human rights and environmental issues. Over 138 million children worldwide are still in child labour and 625 people around the world were either killed or disappeared last year for standing up for human rights. In the EU’s narrative of competitiveness at all costs, it is forgetting the real human impacts which make these regulations necessary.
The directive is not finalised yet. The Commission, Council and Parliament will negotiate the final text in the coming weeks through the trilogue process. There is still time to strengthen this regulation and avoid a huge step back for human rights and corporate responsibility.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
