EU must take further steps to hold companies accountable

25 October 2011

A Commission plan about how the EU can make companies more accountable is a step towards ending the global damage European businesses cause people and planet, according to the European Coalition for Corporate Justice (ECCJ). However, the plans to improve corporate social responsibility (CSR), unveiled by the European Commission today in the CSR Communication, miss the opportunity to make real progress that would help victims of EU-based companies find justice and hold companies accountable for their impacts.

The plans can contribute to stronger rules for European businesses, according to ECCJ, as they show European policy-makers no longer consider that CSR excludes the option of regulating the business sector. The EU and its member states have the duty to protect against damaging corporate behaviour by providing the necessary legislation, as defined in the UN Guiding Principles on Business and Human Rights [2].

Earlier this year the EU announced that it will develop legislation to ensure companies report on their social and environmental impacts.

Filip Gregor, the Chair of the European Coalition for Corporate Justice, said: "The EU is increasingly recognising the human rights and environmental impacts of European companies around the globe – today's announcement is further proof of this but more action is needed to really hold companies to account. We believe the EU has a duty to legislate to guarantee human rights are respected and the environment protected wherever European companies are operating. An obligation for companies to report on their impacts is a first step to better protection for human rights and the environment"

Despite progress in some areas, the plan fails to address some crucial issues. The proposal lacks concrete steps to improve parent company's liability through due diligence measures, meaning European headquarters of companies cannot be held accountable for the damage caused by their subsidiaries or in their supply chain in developing countries. Nor does the plan clarify how the legal framework can improve access to justice for victims of corporate abuses.

Paul de Clerck, steering group member of ECCJ, said: "European companies such as Shell, Tesco and ArcelorMittal take the profits from their business in developing countries but don't want to be responsible for the damage that they cause. The EU must put in place legislation that will hold European companies accountable for the damage caused by their subsidiaries or suppliers and they must take steps to make it easier for victims to go to a European court in case of abuses."