- 7 min read
- Published: 23rd February 2022
New EU corporate accountability law ‘riddled with loopholes’
99% of Irish businesses to be excluded from new EU rules aimed at preventing corporate damage to the environment and exploitation of communities.
A coalition of Irish humanitarian aid organisations, trade unions and academics has today criticised new rules proposed by the EU aimed at cleaning up global supply chains and minimising negative global impacts of business on workers, communities, and the environment, warning that they are inadequate and full of flaws and exemptions.
Under the proposed law, some EU companies would be required to undertake ‘due diligence’ checks along their full supply chains to prevent human rights and environmental abuses. However, it will apply only to companies with an annual turnover of over €150 million and more than 500 employees. In high-risk industries like agriculture and fashion, companies with more than 250 employees would be covered. All other businesses would be exempt.
Sorcha Tunney, Coordinator of the Irish Coalition for Business and Human Rights (ICBHR), established to champion greater corporate accountability, said: “This is a crucial step forward but we need to get it right. Communities around the world have been waiting years for new EU rules to end exploitation and prevent abuses along global supply chains.”
She added: “We need to take forced labour, deforestation and oil spills out of our shopping baskets once and for all, but this proposal just doesn’t go far enough and is riddled with loopholes. It looks like an ineffective tick-box exercise that only very few companies will be required to undertake.”
The coalition said that by limiting its scope to so few companies, the proposal turns a blind eye to many harmful business impacts. The European Commission has stated that, if passed in its current form, 99% of companies would be exempt. Based on latest CSO data, the ICBHR estimates that less than 700 Irish companies will have to do checks, including several in particularly high-risk sectors.
Conor O’Neill, Head of Policy & Advocacy at Christian Aid Ireland, said: “Neither turnover nor staff size alone can properly measure a company’s capacity to harm human rights or the environment. We work with communities badly impacted by the infamous Cerrejón mine in Colombia, now facing pollution of their air and water. While the coal is mined and shipped to Europe, the Dublin-based Coal Marketing Company (CMC) that sells it would not be covered as it has only 27 employees. How can we clean up supply chains if so many businesses are exempt?”
Earlier this month, over 100 high profile companies, investors, business associations and initiatives, including IKEA, Primark, Danone and Patagonia, called for ambitious and mandatory corporate human rights and environmental due diligence (mHREDD) legislation from the EU. They state that “many European SMEs, including signatories to this statement, acknowledge that responsibility for human rights and the environment is not a matter of company size”, arguing that all businesses should be required to carry out proportional checks along their supply chains.
