EU directive mandates corporate accountability for human rights in supply chains: HRW

The new EU directive, adopted today (24 May), mandates large companies to ensure human rights respect throughout their value chains, signalling a transformative shift in corporate accountability, according to Human Rights Watch (HRW).

HRW released a detailed question-and-answer document outlining the provisions, strengths, and weaknesses of the new law.

The EU Corporate Sustainability Due Diligence Directive (CSDDD) requires large companies to conduct due diligence to identify, mitigate, prevent, and remedy harmful human rights and environmental impacts within their operations and value chains, including business partners involved in production, distribution, transport, and storage.

"The EU's Due Diligence Directive represents a landmark shift from voluntary corporate responsibility to mandatory obligations for corporations to prevent and address human rights abuses," said Tirana Hassan, executive director of Human Rights Watch. "This groundbreaking law is a major victory for rights groups, trade unions, and civil society networks at the forefront of the fight for corporate accountability."

Despite intense opposition from powerful corporate lobbyists, the directive stands as a testament to the perseverance of advocates for justice and accountability in the corporate sector. The directive provides for regulatory oversight and the possibility of initiating civil lawsuits against corporations in European courts.

Industrial disasters, such as those in the garment and textile industry, and widespread corporate abuses of human rights, labour rights, and environmental standards in global value chains have driven the push for binding legislation to hold companies accountable. These issues, along with their contributions to the climate crisis, have galvanized support for the directive.

Support for the law has come from a broad coalition, including rights groups, trade unions, political leaders, and even businesses. However, the legislative process, which began in 2020, faced significant challenges, particularly from the governments of France, Italy, and Germany, which sought to weaken the law's provisions. HRW warns that corporate influence over norm-setting should be closely monitored and curtailed to ensure strong protection of human rights and the environment.

The coming years will be crucial for the robust implementation and enforcement of the law. HRW urges the European Commission to monitor how EU member states incorporate the directive into their national laws and legal systems and to provide clear guidance on its implementation and enforcement.

"This new law is a major step toward ensuring that corporations respect their responsibilities toward communities and the environment," Tirana said. "The EU vote opens a new chapter for victims of harm caused by corporations."