Waseem Mardini, Senior Manager, Forced Labor & Human Trafficking
Today, member states of the European Union gave final approval to the Corporate Sustainability Due Diligence Directive (CSDDD), a law created after years of advocacy from a broad set of stakeholders who recognize the need for binding measures to hold corporate actors accountable for their impacts on people and the environment.
Mandatory corporate accountability legislation, like the CSDDD, creates a legal obligation for companies to fundamentally change their practices and carry out due diligence in their supply chains to identify, prevent, mitigate, and account for adverse impacts as a result of their business activities. HUA joins workers, advocates, investors, and businesses alike in celebrating the final passage of the law.
In 2010, Humanity United Action (HUA) began supporting advocacy efforts that led to the CSDDD as part of our long-term mission to extend corporate accountability broadly. We were then and remain today driven by a desire to transform the current economic system that exploits workers in supply chains. This system incentivizes companies to maximize revenue, growth, and profits by lowering the costs of production, which directly impacts the labor force in their distributed global supply chains. Workers, who produce the goods and services that allow companies to operate, deserve dignity and a secure livelihood. We believe that workers’ fates should not depend on corporate quarterly earnings estimates and returning value to shareholders.
Our efforts to support strong supply chain regulations originated in forced labor disclosure requirements through the 2010 California Transparency in Supply Chains Act and the UK Modern Slavery Act. While the disclosure requirements were binding, these measures did not put enough pressure on companies to significantly change their practices. In 2017, HUA shifted its focus to mandatory human rights due diligence laws, with initial funding to support advocacy and implementation of France’s Duty of Care Law (devoir de vigilance) and Germany’s Supply Chain Act (Lieferkettengesetz). Soon after, HUA supported the European Coalition for Corporate Justice, Global Witness, SOMO, and several other partners to coordinate an advocacy campaign seeking passage of an EU-wide law.
In addition to the CSDDD, HUA continues our support for other corporate accountability measures, such as the EU market regulation banning products produced with forced labor and the United States government’s enforcement of Section 307 of the Tariff Act as well as the Uyghur Forced Labor Prevention Act.
As a result of these measures, companies are expected to change how they do business, including how they manage their supply chains. For victims of corporate abuses, this also means more pathways through which to access justice for harms they may have experienced due to corporate activity.
While the EU measure will soon come into force as a result of today’s vote, HUA remains committed to ongoing engagement and funding key partnerships so that the CSDDD, compromised as it is by last-minute reversals, can have a strong implementation across Europe. Throughout the prior regulatory and legislative efforts we’ve supported, implementation has been the stumbling block. It is therefore essential that EU member states take seriously their own obligations to properly fund and staff administrative enforcement authorities, protect standing for advocates representing impacted stakeholders, and prevent the industry from once again relying on certifications and audits. European governments have a crucial part to play in ensuring the CSDDD is as effective as possible in their jurisdictions through strong national regulations.
Businesses and governments must also ensure that the CSDDD and similar laws avoid unintended consequences. Buyers and suppliers both share an obligation to protect workers; the first response of companies that identify potential abuses in a supply chain should not be to cut ties, but rather to engage and collaborate with their suppliers to continuously improve. Best practice in human rights due diligence calls for an ongoing dialogue between a company and its stakeholders.
Advocates and philanthropic funders simultaneously ought to prepare for a future where the volume of requests from corporate actors for assistance could create an overwhelming burden for civil society. While we believe it will be necessary for civil society to build strong relationships with corporations, helping to facilitate meaningful stakeholder engagement, the costs of corporate due diligence cannot be borne by the social sector. As guidance is issued by relevant authorities advising companies on how to comply with the CSDDD, they must take seriously that creating in-house capacities to perform human rights due diligence is a cost of doing business. They cannot continue to outsource their risk management.
In the future, HUA will continue working with our partners to ensure a strong implementation of the CSDDD in Europe. At the same time, we are also collaborating with other donors to explore opportunities for similar mandatory human rights and environmental due diligence legislation worldwide. While the CSDDD will cover companies outside of Europe to a degree, it is important that stakeholders in all jurisdictions are equipped with the means to hold corporate actors to account. This will require legislation informed and empowered by rights-holders which provides access to remedy through their own authorities, rather than relying solely on the enforcement of market states. Through the FORGE donor collaborative, we seek to align our funding with peers who envision a new model for the global economy – one that serves people and the planet rather than solely profits.
