April 2021 - Global Witness
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April 2021
CONTENTS
GROWING MOMENTUM ..................................... 2 ADVERSE IMPACTS .......................................... 12
ALIGNING EU AMBITIONS .................................. 2 LIABILITY AND ENFORCEMENT ....................... 14
THIS BRIEFING ................................................... 2 Civil Liability ..................................................... 14
A CASE STUDY Civil and Administrative Liability..................... 14
ON CORPORATE POWER LEFT UNCHECKED...... 3
Criminal Liability .............................................. 14
HUMAN RIGHTS & ENVIRONMENTAL DUE
Key Requirements for Liability Provisions.......... 14
DILIGENCE .......................................................... 6
Public Enforcement: National Competent
Beyond Standard Due Diligence ........................... 7 Authorities ........................................................... 15
STAKEHOLDER ENGAGEMENT ........................... 8 EU-Level Body...................................................... 17
SCOPE ................................................................. 9 THE COST OF
TAKING ON AN AGRIBUSINESS GIANT ............ 17
APPLICABLE STANDARDS .................................. 9
ELUSIVE JUSTICE ............................................... 18
Human Rights ........................................................ 9
THIS CANNOT WAIT ......................................... 19
Environment ........................................................ 10
Endnotes .......................................................... 20
Good Governance ................................................ 12
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 1
GROWING MOMENTUM supply chains and promote sustainable
development.
In April 2020, the European Commissioner for
Justice, Didier Reynders, publicly committed to THIS BRIEFING
tabling a legislative proposal on sustainable
key
corporate governance.1 The European Parliament
proposals for a robust human rights and
has since shown clear support for this initiative.
environmental due diligence obligation and
In March 2021, a large majority in the Parliament
corporate liability regime as part of a new EU
voted in favour of a legislative own-initiative
Directive on sustainable corporate governance.
report calling for new due diligence and
corporate accountability legislation.2 It aims to inform ongoing EU legislative
discussions and to support the development of a
With a growing consensus amongst civil society,3
robust and enforceable law to ensure greater
the private sector4 and the wider public5 on the
accountability for all companies doing business
need for corporate accountability legislation, the
in the EU.
European Union (EU) has a clear mandate to
introduce a strong, enforceable law.
Our key proposals are:
ALIGNING EU AMBITIONS > The new Directive must require all companies,
across all sectors - including finance - that are
to ensuring sustainable development,6 respect doing ernal market to
for fundamental rights and freedoms,7 and a high conduct human rights and environmental due
level of environmental protection.8 The new law diligence (HREDD).
provides an opportunity for the EU to align the
> Mandatory HREDD will require companies to
core objectives laid out in the Treaties and the
identify, assess, prevent and mitigate their
ambitions of the EU Green Deal with the global
negative human rights, environmental and
impacts of Member States.
governance risks and impacts in their
The last five years has seen the introduction of operations and value chains, monitor the
new laws in France and the Netherlands, further effectiveness of the steps taken and publicly
proposals tabled in the Netherlands, Germany, account for this process.
Switzerland and Norway and others still
> The HREDD process must incorporate
promised in the Netherlands and Austria.9
meaningful stakeholder engagement and a
With ad hoc legislative responses emerging requirement for companies to remedy harms.
across Europe, the introduction of robust EU-
> The law must create a robust liability regime
wide legislation for EU-based companies and
and strong enforcement mechanisms to hold
those doing business in the EU is an appropriate
companies accountable both when they cause
and timely development. Harmonisation of laws
harms and when they breach the due diligence
across the EU will provide greater legal certainty
requirements.
for companies and reduce distortions which lead
to unfair competition within the internal market. > The liability regime should include
And the impacts will extend beyond the EU. administrative, civil and criminal liability. This
must allow victims of harm outside of the EU to
By catalysing a change in the way companies do
access EU courts to ensure that there is
business and creating mechanisms for
meaningful access to remedy for those most
accountability, this law can help clean up global
impacted by harmful business activities.
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 2The proposed legislative intervention from the EU them members of indigenous and Afro-
is long overdue and urgently needed. Global Colombian communities.14
Witness has recorded how, in pursuit of profit,
Footage acquired by Global Witness shows how
corporate actions have led to significant and
some of these people were violently forced out of
often irreversible harms to both people and the
their homes - the scenes of a 2016 eviction in the
planet. One example such corporate abuses is
Roche community show riot police dragging
seen in Colombia.
women along the ground and loading them onto
A trucks.15 This eviction was allegedly carried out
using tear gas and metal projectiles, with
CASE STUDY ON CORPORATE
bulldozers sent in to flatten people s homes.16
POWER LEFT UNCHECKED Cerrejón later stated that it regretted the events
Cerrejón is one of the world s largest open-pit of that day.17
coal mines, and the communities who live
alongside it are some of Colombia s poorest.10 For The mine is also profoundly hazardous. It emits
decades, they have been inhaling poisonous dust pollutants that are invisible to the human eye but
from the mine. Their water has been can cause a multitude of health issues, ranging
contaminated by the toxic waste dumped in their from heart disease to cancer and premature
rivers.11 Meanwhile, the mine s owners BHP, births.18
Anglo-American and Glencore count among the According to a 2018 study in the Journal of
most profitable companies in the world.12 Environmental and Public Health, over 336,000
A desert-like expanse of barren land, Cerrejón people are believed to have developed
covers 690 km² - more than half the size of respiratory complications that are directly
Istanbul.13 Reportedly 35 communities have been attributable to the mine, with over 400
displaced to make way for the mine, many of emergency hospital visits every year.19
2019. Cerrejón Coal Mine in Barrancas, La Guajira, Colombia. Nicolo Filippo Rosso/Bloomberg via Getty Images
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 3Cerrejón is a leech on water too it consumes a were initially directed at Angelica, but when she
staggering 24 million litres every day, which has refused to stay silent about the mine s impacts,
reportedly caused 17 waterways to dry up.20 What they moved onto her family too. At times she has
little water is left for local people is potentially chosen to live apart from her children to protect
contaminated. In 2019, a water sample taken them.32
downstream from one of Cerrejó s dump sites
A colleague of Angelica s, Jakeline Romero, told
contained dangerous levels of mercury.21 That
Global Witness how her teenage daughter had
same year, the company admitted to having
received an anonymous phone call on her way
dumped 578 million litres of liquid waste into
home from school. Tell your family to take care
natural bodies of water.22
of themselves and of you. Because we are going
These health impacts are so severe they re being to kill you, she was told.33
written into local people s DNA. A 2018 study
Threats against Cerrejó s opponents are
found that pollution from Cerrejón is damaging
reportedly common.34
local people at the cellular level, raising the risk
of cancer and chromosomal instability.23 Cerrejón told Global Witness that it rejects any
accusation of being involved with paramilitary
In 2019, Colombia s Constitutional Court ordered
groups or being linked to any case of threats to
the mine s operating company to comply with
social or community leaders.35
health and environmental protection
requirements.24 This was the latest in a series of EUROPE FANS THE FLAMES
decisions against Cerrejón by Colombia s
Europe may be thousands of miles away, but it is
Constitutional Court and Supreme Court.25 Legal
central to the Cerrejón fiasco. In 2019, most of the
cases about the harmful impacts of the mine on
26.3 million tonnes of coal exported from
communities date back to the 1990s.26
Cerrejón36 - worth around 1.2 billion37- was
The company announced it had addressed this shipped to the Mediterranean.38
latest ruling by striking a deal with a local
Cerrejó s three parent companies, are also listed
community for a series of improvements27 a
on the London Stock Exchange, with one
statement local indigenous leaders called
headquartered in the UK and one in
fraudulent and lies 28
Switzerland.39 In addition, two Irish companies
A COMMUNITY PROPELLED INTO ACTIVISM are central to Cerrejó s profitability Dublin
based CMC-Coal Marketing sells and markets all
Angelica Ortiz said she became an activist
of the company s coal, and Ireland s state
because she didn't want other communities to go
company, the Electricity Supply Board has
through what she has.29 She is secretary general
purchased millions of tonnes of it.40
of the Association of Wayuu Women, a local
indigenous campaigns group that has opposed Despite both owning 33.3% stakes in the mine,
Cerrejón for years.30 But in the context of a mine Glencore and Anglo American have tried to
that some say is backed and protected by distance themselves from the allegations
paramilitary groups, criticising Cerrejón poses its surrounding Cerrejón. Both told Global Witness
own risks.31 that Cerrejón is an independently managed joint
venture. 41
The campaign against Angelica began in 2011,
with a series of threatening phone calls. She has A LITANY OF ABUSES SPANNING DECADES
been watched and followed, and drones are
The mine is no stranger to public condemnation.
flown over her home. These intimidation tactics
In September 2020, Cerrejó s operations were
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 4denounced by several prominent UN human the mine site without any prior consultation.
rights experts.42 One of them, the UN Special Some consultations have happened, she said, but
Rapporteur on Human Rights and the only after legal action was taken against
Environment, said that the case was, one of the Cerrejón.50
most disturbing situations he had encountered
By that time of course, the damage had been
during his time in post.43
done.
Some months later, in January 2021, the Global
LEGISLATIVE RESPONSES
Legal Action Network (GLAN) submitted a series
of complaints with the OECD calling for the Multinational companies shouldn t be allowed to
mine s closure the latest in a series of attempts hide behind subsidiaries and supply chains -
to seek justice.44 But to this day affected human rights and environmental catastrophes
communities still lack effective remedy for a like those triggered by the Cerrejón mine will
litany of abuses spanning decades.45 never abate if the corporations that profit from
them aren t held accountable.
The Cerrejón case typifies how corporations
consider themselves immune from laws designed The proposals outlined in this briefing call for
to protect people and the environment. Cerrejón new legislation that would legally mandate more
has repeatedly dodged accountability, despite a responsible business conduct, and hold
series of judgements from Colombian courts and companies liable for human rights violations or
a 2020 report by the governmental auditing body environmental damage. This could help to
the Controller General that confirmed Cerrejón change lived realities for people affected by
was not compliant with the Colombian harmful business activities around the world.
environmental regime. 46 Despite this, the
company maintains that it operates in
compliance with the law and applicable
standards 47
mpany to
sit down with all of the
communities that have been
evicted, have been uprooted, and
have lost their water sources. We
have to figure out how to remedy
all of this. And who better than the
communities themselves to say
how they want to be compensated
or how they want harms to be
Angelica Ortiz, Association of Wayuu
Women, March 202148
In March 2021, Global Witness introduced
Angelica Ortiz to the European Commissioner for
Justice, Didier Reynders.49 She explained to him
that many communities had been displaced from
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 5HUMAN RIGHTS & actual impacts or potential adverse impacts
including
ENVIRONMENTAL DUE DILIGENCE
workers and industrial relations, environment,
Voluntary measures and self-regulation have bribery and corruption, disclosure and consumer
failed to change harmful corporate behaviour 53
This has clarified that due diligence
and improve the outcomes for affected in this context, extends beyond adverse human
communities or the environment. The new law rights impacts. Consistent with this, HREDD in the
must require companies to address their adverse new law should cover this broader application.
risks and impacts on human rights, the
environment and good governance through the
process of human rights and environmental
KEY TERMS:
due diligence (HREDD).
Business relationships should be defined as direct
HREDD is a continuous process that requires
and indirect relationships that a company has
companies to identify and assess their actual and
with its business partners, entities in its value
potential adverse impacts, take action to prevent
chain and other State or non-state actors that it is
or mitigate them, monitor the implementation
linked to through any of its operations, products
and effectiveness of the steps taken and then
or services.54
publicly account for it all. Related to this,
companies have a responsibility to ensure that Value chain refers to all activities that add value,
victims have access to effective remedies when converting any form of input into an output.55
there is an adverse impact. Value chain
activities, operations, business relationships and
The process of human rights due diligence was 56
and
first introduced in the UN Guiding Principles on
with which [the company] has a direct or indirect
Business and Human Rights (UNGPs)51 and the
business relationship and which either (a)
OECD Guidelines for Multinational Enterprises
supply products or services that contribute to
(OECD Guidelines).52 T
[its] own products or services, or (b) receive
Guidance for Responsible Business Conduct has
products or services from the [company] 57
since confirmed
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 6To be effective, mandatory HREDD under the well-resourced, profitable corporate actors
new EU Directive must: and the affected people and communities
that are impacted by their actions.
> Cover actual and potential adverse
impacts that a company causes, As an inherently proportionate and context-
contributes to or is directly linked to specific process, HREDD will require companies
through its business relationships, in line to take measures that are proportionate to and
with the UNGPs and the OECD Guidelines.58 commensurate with their size, context and the
> Cover the severity of their risks and impacts, among other
value chains. factors.
beyond their own operations, closest
relationships or first tier suppliers. In many Beyond Standard Due Diligence
cases, the worst harms occur well beyond the HREDD goes beyond the standard due diligence
first tier of suppliers and often take place in that companies usually undertake in relation to
host, producer and manufacturing countries. specific projects, actions or investment decisions.
HREDD requirements must therefore ensure There are three key differences:
that companies are effectively carrying out
due diligence across this full range of > HREDD is a continuous and ongoing process
relationships. rather than a one-off action.
> Be an ongoing and continuous process, the > International standards for responsible
main aim of which is to prevent harms business conduct such as the UNGPs and
from occurring as a result of business OECD Guidelines require all companies to
activity. In order to be effective, HREDD conduct HREDD to effectively manage their
adverse human rights, environmental and
operating practices, business practices and governance risks and impacts, rather than
decision-making processes. This will range allowing companies to decide whether or not
to do due diligence on a case by case basis.
supplier relationships to its decisions to
expand an existing project or enter a new > HREDD focuses on the impact on and the
operating context. risk to the rights holders, the communities
and the environment rather than the impact
> Require stakeholder engagement on an on and/or risk to the company itself.
ongoing basis. Such engagement must be
integrated into all parts of the due diligence
process and is key for ensuring that affected
people and communities are consulted and
are involved across operations and different
stages of projects. This includes before
business activity begins as well as when
the likelihood of adverse
harms occur, and remediation is required. impacts on people, the
Globally, indigenous communities face environment and society that
increasing threats and marginalisation. Their enterprises cause, contribute to,
rights including the right to free prior and or to which they are directly
informed consent (FPIC) must be respected.
linked. In other words, it is an
> Require the company to provide effective outward-facing approach
remedy for victims of corporate harms.
to risk
Remedy is an essential part of justice and
accountability. In practical terms, it will also OECD Due Diligence Guidance, 201659
help to reduce the power imbalance between
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 7STAKEHOLDER ENGAGEMENT for engagement on an ongoing basis, especially
with key stakeholder groups. Companies should
Meaningful stakeholder engagement is crucial
share information on the plans, implementation
throughout the due diligence process.60 It should
and monitoring of measures to manage their
form an integral part of HREDD, taking place at
actual and potential negative impacts. Such
every phase of the HREDD process61 and
information should be shared in an accessible
throughout the duration of the project, business
format that is appropriate to the context
activities, operations and/or business
including considerations of language, literacy
relationship. This includes efforts to assess or
and culture of the stakeholder group(s).
implement remediation measures. Stakeholder
engagement as part of HREDD is different to Stakeholders may already be marginalised or
engagement done by the board at designated disadvantaged individuals or groups; they may
times such as when setting sustainability targets. also be physically, financially, spiritually or
otherwise dependent on the land or natural
Meaningful stakeholder resources involved in a project. Mechanisms for
engagement is characterised by stakeholder engagement must always seek to
two-way communication and address the inherent power imbalance between
depends on the good faith of the the company and the affected persons or
participants on both sides. groups.67
OECD, 201162 Engagement processes should also aim to
understand how existing contexts and or
The OECD Due Diligence Guidance also confirms
vulnerabilities may create disproportionate
that stakeholder engagement must be an impacts on certain groups. For example, women
ongoing process.63 often hold different positions and responsibilities
example, which involve regular meetings with
in the community to men. There is evidence that
stakeholders are a way to share information,
women human rights, land and environmental
perspectives and build trust.64 Engagement with
defenders face different forms and higher levels
stakeholders before and during the course of the of threats and violence, including gender-based
project or business activity allows the company violence.68 In 2020, Global Witness reported that
to understand the perspectives of those who may over 1 in 10 land and environmental defenders
be affected by their decisions and activities. The
who were killed, were women69 while the
company may also benefit from this input, for Business and Human Rights Resource Centre
example, by pre-empting and helping to avoid reported that between March to September 2020
potential conflicts. during the Covid-19 pandemic, almost a quarter
It must involve all persons or groups that are of attacks against human rights defenders were
directly, indirectly or potentially affected by the women.70 Special attention must be paid to
activities and experts should also be consulted implementing a gender-based approach to
when relevant.65 Additional safeguards may be ensure the safe and equal participation of women
needed since those who participate in in consultative and decision-making processes.
engagement processes, including human rights,
Finally, the right of indigenous peoples and
land and environmental defenders may be
communities to free prior and informed consent
targeted or face criminalisation for speaking out
(FPIC) is paramount and must be respected. FPIC
against harmful commercial projects.66 allows these communities to give or withhold
Companies should be forthcoming with consent to projects which may affect them, their
information and there should be opportunities land or ancestral territory. This is protected in the
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 8UN Declaration on the Rights of Indigenous > General Data Protection Regulation
Peoples,71 the Convention on Biological (2016/679), which applies extraterritorially to
Diversity72 and ILO Convention 169 on Indigenous companies offering goods and services within
and Tribal People.73 the EU see Article 3; and
> Directive on unfair trading practices in
SCOPE agricultural and food supply chains
All companies, regardless of their size can have (2019/633) which also creates obligations for
severe negative human rights and environmental companies based outside the EU see
impacts through their operations and value Articles 1 and 2.
chains. So too, every company may face risks of Small and medium sized companies (so called
bribery or corruption. SMEs ) make up the bulk of EU companies and
will therefore make a significant contribution to
The Directive should therefore apply to EU-based
the success of the new legislation. In addition,
businesses as well as all other companies placing
SMEs may cause, contribute to or be directly
products or services on the internal market
linked to human rights and environmental abuses
or otherwise carrying on business in the EU,
or corruption, with some SMEs even operating in
regardless of their sector. This also includes the
high-risk sectors. SMEs must therefore be within
finance sector.74
the scope of the new Directive.
Global Witness has shown how the financial
HREDD is inherently proportionate and context
sector is often complicit in human rights and
specific. A 2020 study published by the European
environmental harms. Our analysis of the
Commission confirmed that the costs associated
financing of six agribusiness companies linked to
with implementing HREDD would not be overly
the destruction of climate critical forests in the
burdensome for companies.76 In addition, there is
Amazon, Congo Basin and Papua New Guinea
evidence that there are clear benefits to
found that EU-based financial institutions were
conducting HREDD.77
one of the main sources of funds and had backed
APPLICABLE STANDARDS
between 2013 and 2019.75
T
All companies established, domiciled or doing t human
business in the EU must be required to undertake rights, the environment (including climate), and
HREDD, which has the primary aim of preventing principles of good governance. As noted above,
negative impacts. This is in line with the UNGPs this will include a requirement for companies to
and OECD Guidelines which clarify that all conduct HREDD across their operations and value
companies have a responsibility to respect chains. The Directive should set out applicable
human rights, and that the standards for standards for business as outlined below.
responsible business conduct which cover
environmental protection and good governance, Human Rights
apply to all companies. Companies must be required to respect all
internationally recognised human rights as
Precedents for EU legislation which applies to a
established in the UNGPs and OECD Guidelines.
wide cross section of companies include:
The new EU Directive should aim for the highest
> Timber Regulation (995/2010) which relates standard of human rights protections. Strong
to products placed on the internal market
human rights standards help to provide better
see Article 2(b);
legal protections for the most vulnerable groups,
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 9who are disproportionately impacted by harmful
corporate activities. and in case of conflicting
82
standards, companies should find ways to
All human rights are interdependent, interrelated honour the principles of international human
and indivisible meaning that the fulfilment or full rights law.83 The UNGPs and OECD Guidelines
enjoyment of certain rights depends on the both affirm that international human rights
others. Therefore, it is not possible to include law must remain the anchor for applicable
some while excluding others especially as there is standards for business.84
also no hierarchy of human rights.
Environment
Instead, the law must adopt a holistic and The OECD Guidelines include environmental
inclusive approach to human rights protections protection as an important component of
which incorporates the standards included in: responsible business conduct.85 In addition,
companies must be required to respect the
> The international bill of rights,78 customary environment to achieve the objectives on
international law,79 international
environmental protection included in the EU
humanitarian law, regional human rights
Treaties mitments
treaties80 and other instruments such as
declarations, guidelines and principles under the Paris Agreement and the ambitions of
adopted at the international level.81 the European Green Deal.86
> International labour law including ILO Several factors need to be taken into account
Conventions, the ILO Declaration on when establishing applicable environmental
Fundamental Principles and Rights at Work. standards. In contrast to the field of human
rights, there is no comprehensive body of
> International human rights law, including the
standards and legal protections for international law or standards on the protection
marginalised and vulnerable groups such as: of the environment. In addition, international
Indigenous and Tribal Peoples; migrant environmental law generally creates obligations
workers; women and girls; children; gender for States, with many instruments focusing on
non-conforming people; human rights, specific geographical areas.
environmental and land defenders; and
people with disabilities. The new Directive must therefore:
> The Directive should also refer to the human > Incorporate key principles of international
rights standards in national laws as and EU environmental law. In particular, the
applicable standards where these exceed the principle of prevention, the precautionary
protections afforded in international human principle, the principle of sustainable
rights law. Where national laws fall short,
KEY ENVIRONMENTAL LAW PRINCIPLES
> Prevention: focus on protecting the environment and preventing harm first, rather than
remedying it given the long term and often irreversible impacts of harms.
> Precaution: measures should be taken to prevent environmental harm where there are threats of
serious or irreversible damage, even in the absence of scientific certainty about the impact
> Sustainable development: resources should be used sustainably to meet present needs and
ensure that future generations can meet their needs
> Polluter pays: the polluter should bear the costs of the pollution they caused.
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 10development and the polluter pays principle > Refer to other environmental standards such
should be treated as indispensable. as those in EU law and national law as a
starting point. However, national laws often
> Incorporate international environmental law fail to provide adequate levels of protection.
as applicable standards for companies. In A 2020 study on climate change legislation
the case of international law instruments found that most countries focus on sector
such as the Paris Agreement Under the specific interventions rather than developing
United Nations Framework Convention on
Climate Change (Paris Agreement) and the create a unifying institutional structure to
Convention on Biological Diversity, the reduce greenhouse gas emissions or address
requirements can and should be translated 88
With
into business obligations (see below). This such gaps and variations persisting, the new
approach was confirmed by the Dutch EU law must include strong, clear provisions
National Contact Point established under the to define adverse environmental impacts and
OECD Guidelines in a 2019 statement.87 require the application of key principles of
> Adopt broad definitions for the environment environmental law.
and environmental impacts to ensure > Require companies to measure their adverse
adequate protection of the environment. This environmental impacts.89 The new law or
should incorporate an indicative, non- supplemental instruments must provide
exhaustive list of adverse environmental guidance on standards and modes of impact
impacts including climate change, air, land assessment.
and water pollution, use and disposal of
hazardous substances, the production of > Include both direct and indirect emissions in
waste, deforestation and other damage to or requirements for companies to measure,
loss of ecosystems, biodiversity, habitats and reduce and mitigate their adverse climate
species. These definitions and lists should be impacts. In particular, it should include
developed in consultation with stakeholders Scope 1 (direct emissions from owned or
and should leave room to accommodate the controlled sources), Scope 2 (indirect
consolidation and development of this area emissions from the generation of energy that
of law. is purchased and used by the company) and
TRANSLATING INTERNATIONAL LAW INTO BUSINESS OBLIGATIONS: PARIS AGREEMENT
> Require companies to:
> Measure their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions.
> Reduce their total emissions in line with 1.5°C pathways. This must prioritise absolute emissions
reductions in the near-term and limit reliance on carbon offsetting and carbon dioxide removal
technologies.
> Commit to updating GHG emissions reduction targets at intervals, in line with the best available
science.
> Monitor the effectiveness of the actions taken to reduce their GHG emissions.
> Assess the impacts of their actions on efforts to ensure a just transition.
> Apply key environmental law principles in the development of their environmental strategies.
> Report on the steps that they have taken and the effectiveness of these.
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 11Scope 3 (all other indirect emissions representatives, distributors, contractors and
occurring in )
greenhouse gas emissions.90 also 98
Together these provide a firm basis for
Good Governance
introducing a due diligence requirement for risks
Companies must also be required to assess,
of bribery throughout the corporate structure
address and communicate publicly on their
and entire value chain.
adverse impacts on good governance as part of
HREDD. EU Member States have ratified Preventive measures against corruption should
international agreements that prohibit be integrated into the due diligence duty for
corruption and bribery, and prescribe good companies under the new EU Directive.99 For this,
governance standards that should be adopted by the applicable standards should be developed
companies. These include the UN Convention based on existing instruments as outlined above.
against Corruption;91 the OECD Convention on However, this must complement rather than
Combatting Bribery of Foreign Public Officials in substitute the urgent and necessary efforts to
International Business Transactions;92 and the -corruption legal
Council of Europe Civil Law Convention on framework and increase levels of implementation
Corruption.93 Along with other existing and harmonisation across Member States.100
international standards and guidance94 they
provide a strong basis for establishing applicable ADVERSE IMPACTS
standards for good governance in the new The Directive should set out what would
Directive.95 constitute adverse or negative human rights,
environmental (including climate) and
Other components of the -bribery
governance impacts.
framework such as the OECD Guidelines for MNEs
and the Recommendation for Further Combatting In the case of human rights, an adverse impact
Bribery of Foreign Officials in International occurs when the ability to enjoy the right is
Business Transactions96 provide further support reduced or removed.101
with prescribing applicable standards on good
governance risks and impacts. For adverse environmental impacts, a non-
exhaustive list should be included in the new
For example, Chapter VII of the OECD Guidelines Directive, as noted above. For each of these
for MNEs sets out the actions that companies impacts, the scope should include actual or
should take in response to risks of bribery. The potential impacts, whether temporary or
Recommendation (relating to combatting bribery permanent and of any magnitude, duration or
of foreign public officials) clarifies that bribery frequency.102
should be prohibited whether it is done directly
or through intermediaries.97 Annex II of the Such a scope would make all companies by virtue
Recommendation, adopted by the OECD as Good of their carbon footprint responsible for an
Practice Guidance in 2010, further specifies that adverse climate impact. Therefore, as a subset of
measures designed to prevent and detect foreign environmental impacts, adverse climate impacts
bribery should extend beyond directors, officers for business should be assessed in line with the
and employees. Rather, it should include all goals of the Paris Agreement. The Directive must
controlled entities such as subsidiaries and prioritise the near-term reduction of absolute
ect to contractual emissions rather than the setting of net zero
arrangements, to third parties such as agents and targets for decades from now when assessing
other intermediaries, consultants,
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 12Kuching, Malaysia 16 MAY 2015. Deforestation. Photo of tropical rain forest in Borneo being destroyed to make way for oil palm
plantation. Rich Carey/Shutterstock
or their and human rights in local communities.
responses. Net zero targets have been used to Corruption also often exacerbates or expedites
maintain the status quo rather than take effective human rights and environmental harms.
action against climate change.103 Provision on
Finally, human rights abuses and environmental
climate impacts will also need to account for
damage frequently occur together. Global
future scientific developments.
Witness has reported extensively on how human
Adverse governance impacts will include rights abuses including displacement, threats
corruption and bribery in line with international and killings of land and environmental defenders
law prohibitions on these practices as well as often occur in the shadow of polluting or
grand corruption, petty corruption, small bribes environmentally destructive commercial activity
or facilitation payments and business to business such as mining and large-scale monocrop
corruption.104 agriculture.106
Often business activities result in interrelated or
simultaneous adverse impacts. For example,
negative impacts on the climate which have
contributed to climate change, also result in
negative impacts on a range of human rights
including the right to life, health, food, water,
sanitation and development.105 Similarly,
corruption may lead to or facilitate commercial
activity that negatively impacts the environment
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 13LIABILITY AND ENFORCEMENT Criminal Liability
Strong mechanisms for enforcement and liability > for a failure to prevent serious human rights
are indispensable elements of the forthcoming abuses or severe environmental damage that
law which must include effective, proportionate rises to the level of environmental crimes.
and dissuasive sanctions. > for repeated non-compliance with the due
Voluntary measures have neither changed diligence duty.
EU Member States have existing international
accountable for their actions. Ten years after the
obligations on the prohibition and prevention of
introduction of the UNGPs and the revision of the
corruption and bribery which require the
OECD Guidelines that included human rights,
imposition of effective and dissuasive sanctions
much remains the same. Several studies have
(including criminal penalties) against legal
shown that most companies have not taken
persons for these offences.109 This must be
effective action to address the human rights
affirmed in the new Directive since
violations and environmental harms including
implementation across EU Member States
climate change, that are occurring in their
remains low.110
operations and value chains.107 A 2020 study on
due diligence requirements through the supply
chain published by the European Commission,
Controlled companies should include those which
found that only 16% of the 334 business
are economically dependent on the relationship.
respondents surveyed were undertaking due
diligence which took into account human rights
and environmental impacts across the entire
Key Requirements for Liability
value chain.108 Provisions
The proposed model for liability will help to
The Directive should therefore provide for a create routes to remedy for victims of corporate
model of liability that applies as follows: abuse, catalyse the necessary changes in
business conduct and end the prevailing lack of
Civil Liability corporate accountability for the harms resulting
> for human rights harms that a company, or any from business activities. This subsection sets out
company that they control or have the ability ten key requirements to ensure that liability and
to control, has caused or contributed to. enforcement provisions are effective.
> for human rights and environmental harms 1. Both actions and omissions may form the
that a company is directly linked to through its basis for liability. This is important to prevent
the creation of perverse incentives for
business relationships, unless it can show that
inaction from companies.
it has taken all reasonable measures and
exercised due care to prevent these harms. 2. The Directive must expressly indicate that
successful implementation of HREDD will
Civil and Administrative Liability not automatically absolve companies from
> for environmental harms that a company, or liability for harms. Instead, liability will need
any company that they control or have the to be assessed on a case-by-case basis. This
ability to control, has caused or contributed to. will consider factors such as the extent to
which the measures in place were designed
> for breaches of the due diligence duty or and implemented to prevent the harm(s)
failure to carry out adequate human rights and from occurring.
environmental due diligence.
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 143. The Directive must establish joint and peculiarities of transnational litigation.111 In
several liability for both human rights and addition, in some instances, particularly in
environmental harms that result from the case of environmental or climate harms,
corporate activity. It should further clarify the impact may not be evident for several
that the liability of one company (be it a years.
parent, controlling, supplier or
subcontracting company) will not preclude 9. Liability provisions must be established
or replace the liability of another. without prejudice to existing or future
liability regimes. This will confirm that these
4. Neither administrative liability nor provisions will not be weakened or
criminal liability can substitute for civil undermined by subsequent legislation.
liability. Instead, these systems should be Article 3.2 of the Environmental Liability
viewed as complementary. A key reason for Directive (2004/35/EC) provides an example
this is that civil liability offers remedies of such a provision.112
directly to those who are affected. For
example, court orders in civil cases may 10. Provision for financial support for victims
prohibit or stop the harmful conduct, require should be included. Litigation invariably
restitution and/or provide financial involves high costs to claimants which are
compensation to victims. In contrast, often prohibitive. This is exacerbated as well-
findings of administrative liability or criminal resourced companies regularly fight tooth
liability in these contexts result in fines and and nail in claims against them. In addition,
other sanctions which focus on penalising the Global Witness has documented how
company or individuals involved rather than companies use a range of measures to
responding to the victims. criminalise and intimidate opponents.113
5. Administrative or criminal proceedings or
decisions against a company must not Public Enforcement: National
preclude civil claims (or vice versa) against Competent Authorities
the same company, or in respect of the same A robust public monitoring and enforcement
impacts. Further, a finding of corporate system must be established at the EU Member
criminal liability should be without prejudice State level to complement judicial enforcement
to individual criminal liability of directors
mechanisms. Key proposed features and
and/ or senior managers where applicable.
functions for a national competent authority (CA)
6. Victims who suffer harm within or outside are set out below.
of the EU must be able to bring cases in EU
courts against EU-based defendants. An overreliance on private litigation for
enforcement is undesirable and ineffective.114
7. The Directive must reverse the burden of However, to ensure that public enforcement
proof or establish a presumption of
mechanisms are effective under the new law, it
liability in civil claims against companies.
should address the well-known shortcomings of
In most cases, victims do not have and
struggle to obtain the critical information similar systems. For example, the EU Timber
needed for their case which is held by the Regulation (995/2010) provides for competent
company. In addition to the major imbalance authorities (CA) to conduct compliance checks
of financial and human resources, this and enforcement functions however, major
provides a major hurdle for victims seeking challenges remain for implementation:
access to justice for corporate harms. Authorities lack sufficient resources, knowledge
and skills to undertake the compliance checks or
8. Limitation periods for bringing legal
actions must be extended to account for the follow up on enforcement actions;115 and the
complexity of the cases and other limited penalties and powers of these authorities
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 15remain insufficiently dissuasive forms of The new Directive should further provide that CAs
enforcement. are required and empowered to respond to
and/or investigate complaints from third parties.
DESIGN
This will overcome a major shortcoming of the EU
To ensure the independence and impartiality of Timber Regulation which does not require the CA
CAs, they must be established independently to act. A reliable and effective procedure for
from government ministries, particularly those substantiated concerns should also be included,
with mandates relating to the promotion of building on the EU Timber Regulation model.118
business interests. This will help to prevent
conflicts of interest and potential bias. In addition to responding to complaints that a
company has breached its due diligence
CAs must also be adequately resourced through obligations and/or caused harm, CAs must be
financial support and staff with appropriate empowered to investigate on their own initiative.
training and expertise. To ensure their To ensure its effectiveness, CAs must also be
effectiveness, budgets and resources will need to allowed to summon people to provide
match their functions and powers, and account testimonies, request information, inspect
for training and capacity building of staff. premises and sanction companies for non-
cooperation.
MONITORING AND ENFORCEMENT
Central functions of the CA will be to monitor the CAs must be empowered to enforce due diligence
compliance of companies with the HREDD requirements through an administrative liability
requirement, assess the quality of their function. However as noted above, this must be
performance including through investigations without prejudice to civil or criminal liability for
and enforce the HREDD requirement. harm. Together, such measures will support
better monitoring, prevention of harms and
Monitoring due diligence practices should accountability.
include procedural monitoring (checking
compliance with reporting requirements) and SANCTIONS
substantive monitoring (assessing the quality and To ensure the effectiveness of this enforcement
adequacy of due diligence practices). Experts mechanism, CAs must have the power to impose
suggest that the CAs should review a sample of sanctions for non-compliance or breaches of
reports on a regular basis, pairing this with a standards and for harms.
responsive approach through which they carry
out additional reviews and investigations when An absence of penalties has been shown to result
stakeholders raise concerns or complaints.116 To in low levels and poor quality of compliance by
support this, it should maintain a list of the private sector.119
companies with reporting obligations and a The Directive should provide for escalating
public repository of reports matched against it. penalties for non-compliance and environmental
The new directive should therefore require the damage. This should include a range of measures
establishment of a reporting mechanism that such as: fines (as a percentage of turnover);
allows third parties to submit complaints or temporary or permanent bars on trading;
concerns. Article 32 of the Market Abuse withdrawal of the license to operate; inclusion on
Regulation (594/2014) 117 imposes such a a public list of non-compliant companies; bar on
requirement for States to enable reporting of access to public benefits such as public
actual or potential infringements of the procurement contracts, export credit and public
Regulation. finance; referral to the courts or prosecutors.
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 16Repeated failures should constitute a criminal greater harmonisation between Member States.
offence. This is particularly important given that many
companies operate in multiple EU Member States
Such an approach is adopted in the Dutch Child
and therefore coordination and cooperation
Labour Due Diligence Law which imposes fines
between national CAs will be crucial to ensuring
for non-compliance which may escalate to
effective enforcement.
criminal sanctions in instances of repeated
violations.120 To improve legitimacy and effectiveness, this
body should have a multi-stakeholder structure,
FURTHER MEASURES
including with representatives of rightsholders
In addition, to help prevent negative impacts and and regularly receive stakeholder and expert
improve outcomes for those negatively affected, input.
CAs should establish an early warning system and
facilitate claims for civil remedies.
The above section set out our proposals for
An early warning mechanism allowing human
effective liability and enforcement mechanisms
rights, environmental and land defenders, rights-
under the new law. However, at present, local
holders and other parties to raise concerns can
communities that suffer the awful impacts of
help to prevent escalation of issues and prevent
corporate activities on their rights, livelihoods
abuses. These should trigger a quick response
and land are almost always left without recourse
from the CA which should reach out to the
against those responsible. Communities seeking
company to demand information and
justice face long, difficult and expensive legal
appropriate corrective or protective actions.
battles with uncertain outcomes. The following
Finally, CAs should be empowered to facilitate case study provides one such example.
efforts of victims to pursue civil remedies in
court. Following a finding of non-compliance with THE
due diligence requirements for example, the law COST OF TAKING ON AN
should facilitate the use of such a decision as the AGRIBUSINESS GIANT
basis for or in support of civil liability claims In January 2019, a BBC reporter arrived at Sahn
against the company. This will help to afford Malen in southern Sierra Leone to find it
remedies to affected persons and communities. deserted. Thousands of people had fled after two
As noted above, a finding of administrative (or men were allegedly shot and killed by state forces
criminal) liability cannot preclude a civil claim in a dispute about land grabbing for palm oil. The
against the company in respect of the same or soldiers were reportedly deployed to protect
related damage. European agricultural company Société
Financière des Caoutchoucs (Socfin).121
EU-Level Body
The new Directive should establish an EU-level The community explained how, shortly
oversight body with monitoring, capacity afterwards, the police and military carried out a
building, advisory and standard setting functions. series of raids people were beaten and their
homes looted. Fifteen people were arrested,
This will help to fill gaps in implementation,
including the local MP, who was later charged
provide harmonised guidance for CAs and map
with conspiracy and incitement and ordered to
performance over time. Further, it will help to
pay a fine of 60,000,000 Leones ( 13,000) or face
ensure consistent, robust practices are
six months in jail.122
implemented across national CAs, promoting
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 17A woman called Mama Kobau told the BBC, "Two between Cambodian company Khaou Chuly
soldiers came here and repeatedly hit my door Development Co (KCD) and Socfin s Asian arm
They asked me to give them 300,000 Leones Socfinasia. It is now solely owned by
[roughly 65]. I told them I had no money. They Socfinasia.130 More than 800 families were
took away my phone and asked my son to kneel impacted by the plantation, with many evicted
down before they beat him mercilessly. 123 from their land.131 Srong Prou used to grow rice
and was able to produce and sell 60-70 sacks a
This community is one of many in the Global
year. With the land she had left she could only
South that says Socfin or its subsidiaries were
make ten. 132
given their land without their consent, or that
they were coerced into signing it away. Countless Angry at the crippling effect this has had on her
people have been evicted from their land to make family, Srong Prou decided to join local protests
way for Socfin plantations, some violently. As a against Socfin. As a result, she says she was
result, protests have been ongoing for years in charged with destroying company property and
Sierra Leone, Cameroon, Liberia, Nigeria, provoking a fight, and was summoned to appear
Indonesia and Cambodia. Many have been met in court in 2009 - and again in 2017.133
with violence or arrests. 124
ELUSIVE JUSTICE
The Socfin Group is a major global trader in Communities in Cambodia, Cameroon and
agricultural products, headquartered in Liberia have been trying for years to seek justice
Luxembourg and listed on its stock exchange.125 for the harms inflicted on them as a result of the
Its companies preside over 400,000 hectares of activities of the Socfin Group.
land across Africa and Southeast Asia, much of it
palm oil and rubber plantations.126 That s roughly Indigenous Cambodians have launched a civil
equivalent in size to the Chinese capital Beijing.127 case against the Bolloré Group in France, calling
for compensation for land they say was taken
Socfin is controlled by two European families from them by Socfinasia.134 The case was initially
those of Belgian businessman Hubert Fabri and delayed because after a court summons from
renowned French tycoon Vincent Bolloré, who is France, Cambodian plaintiffs were denied visas
currently worth an estimated US$ 7.3 billion.128 by the French embassy.135
Through a network of companies registered in
Luxembourg, Belgium and Switzerland, Hubert Cameroonian groups and international NGOs
Fabri and the Bolloré Group own 93% of Socfin s have attempted litigation in France too. In 2019,
shares.129 they tried to sue Bolloré for reneging on a 2013
agreement to improve the working and living
conditions around the palm oil plantations of
just lost our land, we Socfin s local subsidiary Socapalm.136 This
lost so much more. Our followed a complaint made to the OECD in 2010
cataloguing harms inflicted by the company
education and our including contaminating local water sources,
future. blocking communities access to their crops, and
physical abuse by security guards working for the
Srong Prou, Cambodia company.137
Srong Prou is an indigenous farmer from Socfin was found to have violated the OECD
Cambodia who says she lost her land after Socfin- Guidelines and was presented with a number of
KCD began developing rubber plantation in 2008. recommendations for making good on the
At the time, Socfin-KCD was a joint venture damage done. But the case ran aground in 2017,
GLOBAL WITNESS BRIEFING APRIL 2021 Holding Companies to Account: How a new EU law can help create a more sustainable future 18after the Socfin Group refused to independently that Socfin is able to acquire and cultivate land
audit its operations and failed to fully comply because of decisions made by local officials in
with the remediation plan that had been agreed countries where the rule of law is weak.
to in 2013.138
THIS CANNOT WAIT
For decades, businesses have profited from
human rights abuses and destructive practices
that have polluted the environment and wrecked
the planet. Those who have tried to stop them
have paid with their jobs, and their lives. Global
Witness reported that in 2018, 167 land and
environmental defenders were killed for standing
up to harmful corporate projects.142 That number
rose to 212 in 2019, with the worst violence
recorded in mining and agri-business sectors.143
Paris, France. 1 June 2017. Several dozens of activists gathered
outside the headquarters of Bolloré, where the annual Board of Companies have also played an unparalleled role
Directors meeting was held to protest against the irresponsible
exploitation of industrial plantations in several African countries. in creating the climate crisis144 and though the
LE PICTORIUM/ Alamy Live News international community acknowledges that we
are now at tipping point, this has not stopped.
Meanwhile, in 2019 indigenous Liberian Tropical deforestation is responsible for
communities filed a complaint with the approximately 8% of annual global greenhouse
International Finance Corporation, which had gas emissions, yet EU-based banks were the
previously given Socfin a US $10 million loan. The biggest provider of international finance to six of
60-page complaint listed a myriad of abuses the most harmful agribusinesses involved in the
inflicted on those who lived near or worked on destruction of climate-critical forests to the tune
the plantations, including that female employees .145
were habitually blackmailed and coerced into
having sex. A conflict resolution process was The dominant economic and business models
proposed but Socfin rejected it. Socfin has denied based on infinite growth and prioritising short-
that its security forces and staff committed term profits and shareholder value are wholly
gender-based violence. 139 unsustainable. We desperately need a change in
the way that companies do business. The new EU
In the face of these struggles for justice Directive can help to achieve that by introducing
seemingly none of which have so far been a HREDD requirement with effective,
successful the agricultural giant has fought proportionate and dissuasive sanctions for
back hard against attempts to smear its name. companies. It must make it possible to hold
Since 2009 Bolloré and Socfin brought more than companies accountable for their actions and give
20 defamation lawsuits against NGOs, journalists, victims of corporate abuse access to remedies
media companies and authors who had that they have been denied for decades.
denounced the company s practices - including
France 2, Libération, Greenpeace and Sherpa.140
Socfin has rebutted criticisms made against it,
claiming that its aim is to further development by
ensuring that local communities and workers
benefit from its operations.141 It is also accepted
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