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Coming soon in Europe: laws requiring corporate due diligence on human rights?

We’re following with interest several legislative initiatives in Europe that, if successful, would create enforceable legal requirements for companies to prevent their worldwide business activities—and those of their subsidiaries and contractors—from fuelling human rights abuse.

The key word here is enforceable. Under each of the proposed laws, people anywhere harmed by a company based in the relevant European jurisdiction would have a clear right to sue the company for damages in that jurisdiction.

Here’s a quick look at each of these legislative initiatives:

French “duty of care” bill

France’s lower house of Parliament is reviewing legislation that would require large companies in France to develop and publish due diligence plans to prevent human rights and environmental harms linked to their activities—and those of the entities they control, including suppliers and subcontractors.

Interested parties would be able to request a court order forcing a company to account for plan implementation. Companies that fail to meet the legislative requirements could be fined up to 10 million euros and could be held liable for associated damages.

The bill will be considered by the French Senate (which last year rejected an earlier draft of the bill) as early as this summer.

Swiss Responsible Business Initiative

Last year the Swiss Coalition for Corporate Justice launched a “popular initiative,” a mechanism allowing Swiss citizens to seek amendments to the country’s federal constitution. If successful, “The Responsible Business Initiative” would require companies to carry out due diligence regarding human rights and environmental risks. Failure to do so would result in civil liability.

This fall, the initiative will be submitted to the Swiss government, which may present a counter proposal. If satisfied with the government’s proposal, the coalition may withdraw its initiative. Otherwise, the initiative will go to a popular vote among Swiss citizens.

Other European initiatives

Civil society organizations are starting to promote similar legislative proposals in other EU countries, including Austria, Germany and Sweden.

Pressure is also mounting on the European Commission to develop EU-wide legislation on human rights due diligence.

In April 2015, members of the European Parliament adopted a motion calling on the European Commission to “create a legal obligation of due diligence for EU companies outsourcing production to third countries, including measures to secure traceability and transparency.”

Then in May of this year, the parliaments of eight European states supported a call for EU-wide duty of care legislation, to ensure European companies respect the human and environmental rights of people and communities affected by their activities, including outside Europe.

The adoption in Europe of legislation of this nature would be a game changer, and would highlight the inadequacy of the Canadian government’s current approach to transnational business and human rights. In Canada as in the rest of the world, a move beyond voluntary “corporate social responsibility” schemes and towards enforceable laws requiring that businesses refrain from causing harm is long overdue.