Inside job deregulation small

Big business set to derail corporate accountability law for human rights abuses and climate change

The European Commission’s proposal on human rights obligations of companies bears damaging marks from a successful business campaign, a new report said.

A new report by lobby watchdog Corporate Europe Observatory (CEO), Friends of the Earth Europe (FOEE) and Friends of the Earth Germany (BUND) has uncovered the astonishing extent to which pro-corporate voices - from both within and outside the European Commission (EC) - have succeeded in postponing and weakening a proposed EU law which seeks to hold big business accountable for human rights abuses and environmental damage. 

The proposal - intended to prevent catastrophes like Rana Plaza in Bangladesh, where over 1100 textile workers lost their lives - risks making very little difference as it stands. Initially outlined in October 2020, it was urgent and ambitious until it was the subject of a campaign waged by business lobbies in Denmark, Sweden, Germany, France, and elsewhere. The Commission’s final proposal, published in February 2022, represents a worrying dilution of original ambition.

The final Corporate Sustainability and Due Diligence (CSDD) proposal gives companies lots of options to escape liability and makes it extremely difficult for victims to prove that a company acted wrongly. Far fewer companies are covered by the law and it excludes significant parts of the value chain. It also fails to make climate action part of companies’ due diligence obligations and doesn’t include obligations for short, medium, and long-term emission reduction targets. Nor does it allow companies to be taken to court in cases of failure to reduce emissions.

And it was the role played by the Commission’s own Regulatory Scrutiny Board (RSB) that ultimately secured this outcome. The RSB is made up of unelected officials who are charged with ensuring that new EU legislation does not damage business ‘competitiveness’ or become too ‘burdensome’. This approach risks sacrificing the social and environmental benefits of legislation to accommodate business interests. 

When the final proposal was published environmental groups, consumer associations, human rights groups and trade unions alike all cried foul. 

The European Parliament must urgently take steps to ensure that the CSDD proposal recovers its original ambition to hold business to account for abuses in its supply chain: the deregulatory nature of the Commission and the RSB need to be entirely re-thought. 

It’s simple: to ensure protection of human rights and the environment, we need strong laws. And we need them now. 

Paul de Clerck, Campaigner at Friends of the Earth Europe, said:

“This law should first of all be about bringing justice to victims of corporate abuses. It fails to do that and risks becoming a ‘tick-the-box’ exercise where companies outsource their responsibility to others in the supply chain and escape liability." 

“Big companies successfully lobbied to achieve that. The European Parliament and member states must ensure that the law will stop corporate abuses and bring remedy to those affected.”

Vicky Cann/Kenneth Haar, Campaigner at Corporate Europe Observatory, said:

“Corporate lobbies have successfully managed to head off an ambitious proposal that would have protected so many people in preventing climate catastrophes and human rights violations. 

“The evidence in the report reveals a scary reality. Business interests specifically targeted the Commission’s Regulatory Scrutiny Board and it paid off. We need the European Parliament and EU member states to reverse the effects of what is, quite frankly, an inside job.”


Notes to editors:

The original proposal in February 2020 had several ambitious facets. They were: 

  • 1)Deeming iIndustry’s own voluntary initiatives inefficient; 2) Stating that rules should cover not only direct suppliers but the whole supply chain;, 3) That the scope was not only the biggest companies, but all companies; 4) Mandatory rules on directors’ duties, putting some onus on individuals; 5) That victims should have access to courts in the company’s home country; 6) That there should be strong climate obligations to ensure that business complies with the EU’s climate obligations.
  • The process outlined in the report has already led to the significant dilution of the CSDD file. But the file remains under threat. Corporate lobbies remain very active, and centre-right MEPs have demanded the file's "postponement" using the cover of the Ukraine crisis.

The RSB and lobbying tactics 

  • The RSB should not discuss individual legislative proposals in meetings with lobbyists, but this did not stop corporate lobbyists from deliberately targeting it as part of its campaign against the CSDD file.
  •  The Danish Government worked especially closely with Danish business interests with "good cooperation" while the CSDD file was being prepared.
  • DG Just, the original solo lead on the CSDD file, was unusually cautious with corporate lobbies, despite receiving over 100 approaches. DG Grow, which was subsequently brought into the file, is traditionally closer to industry and was much more available to business lobbies.
  •  Perhaps as a result of this, Danish industry specifically decided to target the RSB with its concerns and demands.
  •  The RSB is supposed to encompass economic, social, and environmental expertise, but almost all members only have economics or business administration backgrounds.
  •  Of the 23 external meetings held by chairpersons of the RSB since it was set up in 2015, 90%+ were held with corporate interests or think tanks supportive of 'Better regulation'.
  • The RSB is part of the EU’s 'Better Regulation' agenda which champions 'evaluation' as a policy tool, so it is ironic that the 'Better Regulation' agenda itself has not undergone any substantial review.