Members of the European Parliament’s Committee on Legal Affairs (JURI) approved, on Wednesday 27 January, almost unanimously (21 votes in favour, 1 against and 1 abstention), the draft legislative initiative report drawn up by Lara Wolters (S&D, Netherlands) on human rights and environmental due diligence in the corporate supply chain.
“This report reflects the level of ambition that we want the European Commission to have when it presents its proposal next spring” (see EUROPE 12477/24), the rapporteur explained to the press the day before the vote.
According to the European Parliament’s final text, the future directive will have to ensure that companies operating in the Internal market fulfil their obligation to respect human rights, the environment and good governance and do not contribute to negative impacts on them through their own activities or those directly related to their operations, through a business relationship or in their value chains.
Despite divisions on this issue, the political groups agreed that the future legislation should apply to large companies operating in the internal market, as well as to listed SMEs and high-risk SMEs.
The text also provides for companies to be held accountable, in accordance with national law, for the negative impacts they cause on human rights, the environment and good governance.
On trade, MEPs want to go further and also call for a ban on the import of products linked to serious human rights violations, such as forced or child labour.
Three compromise amendments rejected
All the compromises reached between the political groups were adopted (see EUROPE 12641/21), with the exception of three, which concerned, in particular, access to justice for victims.
One of the amendments included the possibility for victims affected by damage caused by companies operating in the EU to choose the law of a legal system with higher standards regarding human rights.
The S&D Group’s amendment calling for access to justice for victims in non-Member States - where due diligence rules should be applicable in cases where the subsidiary of an EU parent company causes harm - was not adopted, but, according to our information, following a series of votes, the rapporteur’s original text on this point was finally adopted. The S&D group hopes that this provision will be maintained in the final vote at the March plenary session.
Lukewarm enthusiasm from the industry
It is difficult, at this stage, to estimate the industry’s real appetite for such an initiative. Many companies are currently reserving judgement pending the final proposal from the European Commission. Nevertheless, some have already expressed a rather lukewarm enthusiasm for the project.
“Such an initiative should not lead to the State’s responsibility being placed on companies, nor should it make them responsible for impacts in the supply chain - usually involving many components and actors - that are completely beyond their control”, said the organisation BusinessEurope, in a letter sent to the European Commission to MEPs of the JURI Committee on 21 January and seen by EUROPE.
According to the organisation, the scope desired by MEPs is far too broad and it would be impossible in practice to manage all the risks associated with a company’s business relationship throughout the value chain.
For Lara Wolters, one should not stop at the position of large organisations, such as BusinessEurope , but also take into account individual companies, such as Adidas, Unilever or The BodyShop , which have publicly supported this initiative, in particular in order to avoid having to comply with 27 different rules in the EU.
It should be noted that on the same day, the European Parliament Committee on the Environment (ENVI) adopted a draft opinion that focuses on monitoring and mitigating negative environmental impacts in corporate supply chains. The INTA, DEVE and AFET committees also issued opinions. (Original version in French by Marion Fontana with Damien Genicot)