[This article exists also in French]
A growing body of work is documenting how the operations of European companies outside the European Union (EU) have been implicated in violations of internationally accepted human rights and environmental standards. The European Coalition for Corporate Justice (ECCJ) has highlighted many of these cases in different publications like the 2 case studies that we are now publishing.
These cases illustrate how two concrete European companies are not respecting human rights and not respecting the environment in countries outside the EU -an attitude which clearly would not be tolerated within Europe. "Failure to Communicate" explains the lack of transparency about the environmental pollution of ArcelorMittal mines in South Africa despite repeated claims by the affected communities and despite several court intents. "The Powerful and the Powerless" illustrates the violation of consumers’ rights in 7 departments of Colombia where Spanish energy group, UnionFenosa, provides highly costly but very deficient electric services which are regularly costing people’s lifes.
These 2 cases are not isolated. Unfortunately there is plenty of documented other cases of many of the largest European companies which, unfortunately, do not make it often to mainstream media.
The current European legal framework on human rights and the environment applicable to European companies’ worldwide operations and supply chains is characterised by lack of protection and access to justice for victims, risk and legal uncertainty for companies, and incomplete and/or poorly enforced public policies and regulation. The framework put forward in 2008 by Professor John Ruggie addresses these issues and has given new momentum and direction to the business and human rights agenda.
The European Union and its Member Sates have welcomed the Ruggie framework and played an important role in the renewal of his mandate. Now is the time for the EU to consider how best to contribute to the further operationalisation of the Ruggie framework, and introduce legislation to ensure the legal framework in the EU ensures the three pillars are implemented coherently throughout the EU.
ECCJ has developed a number of proposals at EU level to bridge the current governance gap identified by Professor Ruggie. The proposals of ECCJ for legislative reform to improve corporate accountability in the EU provide concrete measures that the EU and members states can take to operationalise the Ruggie framework.
The proposed legal reforms developed by the ECCJ provide concrete and realistic opportunities for the EU to show their commitment to operationalising the Ruggie framework. Most importantly, the proposed solutions will contribute to an ending of situations of abuse like the ones illustrated in this document.
As a contribution to the debate at EU level, the ECCJ has provided detailed legal proposals:
• Enhancing direct liability of parent companies — Parent companies should be held liable for their subsidiaries and the contractors which they control, for environmental and human rights impacts. • Establishing a parental company duty of care — Companies should take reasonable steps to identify and prevent human rights or environmental abuses within their scope of responsibility. • Establishing mandatory environmental and social reporting — Large companies should have clear standards to which they report risks and impacts of their activities within their scope of responsibility.
Apart from these proposals, the ECCJ is further exploring several other proposals, which are relevant to the Ruggie mandate as well:
• Eliminating substantive obstacles victims face before courts — Victims of violations and concerned citizens should be given right to enforce corporate obligations not just on their on behalf but also on behalf of affected communities and general public. Victims should not be deterred from litigation by risk of loser-pay principle. Courts should be able to order corporations to disclose necessary evidence.
• Enhancing liability of senior directors — Corporate executive should be vicariously liable for their companies’ violations of human rights and environmental standards.
The proposals are strongly rooted in belief that the State duty to protect is a core principle of the business and human rights framework. The proposals make thus a strong case in favour of the State duty to protect, but also bridge out successfully to the other two principles by fulfilling the corporate responsibility to respect and the need for effective remedies. In line with the SRSG framework, the three proposals have been developed with the clear intention to: (1) maximise the State duty to protect by identifying necessary legal obligations and enforcement mechanisms, (2) make explicit the corporate responsibility to respect by proposing changes to corporate law to strengthen the company’s duty of care and reporting duties, and (3) ease access to justice for victims of corporate harm by lifting the liability veil in the structure of corporate groups, increasing the legal duties of care imposed on companies in relation to human rights and environmental impacts, changing standing rules.
As indicated by the SRSG, “governments should not assume they are helping business by failing to provide adequate guidance for, or regulation of, the human rights impact of corporate activities. On the contrary, the less governments do, the more they increase reputational and other risks to business.”
