MEPs pave the way for higher environmental standards

New EU law on due diligence will also cover human rights issues

MEPs are urging companies and investors to focus on sustainability by paving the way for a new EU law that requires them to address human rights and environmental standards.

A legislative report, published on 10 March, calls for the urgent adoption of a binding EU law that ensures companies are held accountable and liable when they harm - or contribute to harming - human rights, the environment and good governance. It must also guarantee that victims can access legal remedies.

It saw 504 votes in favour, 79 against and 112 abstentions.

The European Commission has said it will present its legislative proposal on the matter later this year.

Binding EU due diligence rules would oblige companies to identify and remedy aspects of their operations, direct or indirect business relations, investment chains that could or do infringe on the following:

• Human rights, including social, trade union and labour rights
• The environment, such as contributing to climate change or deforestation
• Good governance, such as corruption and bribery.

MEPs stressed that due diligence is primarily a preventative instrument that requires companies to take “proportionate measures” based on such factors as the severity of the impact and the size of the undertaking.

“This new law on corporate due diligence will set the standard for responsible business conduct in Europe and beyond. We refuse to accept that deforestation or forced labour are part of global supply chains. Companies will have to avoid and address harm done to people and planet in their supply chains.

“The new rules will give victims a legal right to access support and to seek reparations, and will ensure fairness, a level playing field and legal clarity for all businesses, workers and consumers,” said MEP and Dutch politician Lara Wolters.

Companies that want to access the EU internal market, including those established outside the bloc, would have to prove they comply with environmental and human rights due diligence obligations.

EU trade agreements should include these aims in their trade and sustainable development chapters.

MEPs also specifically asked the commission to thoroughly review whether companies based in Xinjiang exporting to the EU are involved in human rights breaches, especially those related to repression of Uighurs.