The European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the Legal Affairs (JURI) Committee recently published a study on Corporate Social Responsibility (CSR).
Building on both European Union (EU) law and chosen Member States’ legislation, the study provides an understanding of the extent to which Member States are supporting the development and the implementation of CSR strategies in the business community, with a particular focus on due diligence requirements. The study also provides recommendations for the development of a comprehensive and structured approach to CSR for the whole of the EU.
This study comes at the same time when European Commissioner for Justice, Didier Reynders, announced that the Commission was committed to introduce new rules for mandatory corporate environmental and human rights due diligence. Over the last years MEPs, trade unions, NGOs and other stakeholders have joined together to call on the EU to introduce human rights and environmental due diligence legislation.
The motivation from the European Parliament to trigger such action came following 1134 deaths and 2500 injuries when a Bangladesh garment factory, Rana Plaza, collapsed in 2013. The series of failings, deemed corporate malpractice, have been recognised as the deadliest garment-factory disaster in history. The factory was making clothes for well known Western brands.
The impact of companies’ activities on society and on the environment significantly affect all stakeholders along the supply chain, from the labourers making products through to the consumers purchasing the items, and the communities in which they live. As a consequence, policy-makers face the question of whether companies comply with their duties to prevent, identify, manage and mitigate any possible negative impacts that may result from the business activities throughout the global supply chain. This process that is known as ‘corporate social responsibility’ (CSR).
Today’s trigger for action likely comes in light of the disclosures of massive human rights abuses taking place in China where companies in Europe and the US are being asked to confirm their supply sources and the treatment of workers within manufacturing plants. It is estimated that over 80,000 Uyghur muslims have been transferred out of their homelands in Xinjiang and assigned to factories producing automotive, electronics and textile supplies for western companies. Big brands such as Abercrombie & Fitch, adidas, Amazon, Apple, BMW, Esprit, Fila, Gap, H&M, Inditex, Marks & Spencer, Nike, North Face, Puma, PVH, Samsung and UNIQLO have all been shamed as their product lines are associated with these forced labour camps in China. The Chinese Communist Party (CCP) policy is known as ‘Xinjiang Aid’, but in reality, it is the practice of illegal forced labour, a serious human rights violation.
Specifically in relation to foreign trade outside of the European Union, trade agreements and trade preference schemes provide specific guidelines and criteria under which countries are able to supply the European Union with goods. The European Parliament oversees these trade agreements with a view to ensuring that the human rights and sustainable development chapters are applied to any negotiated trade relations. Bangladesh has a trade relationship with the European Union under Everything But Arms (EBA) but is failing to comply with the criteria for which it has been granted the award – as is Cambodia, Myanmar, Pakistan and The Philippines as some of the worst human and labour right violators receiving EU trade subsidies. Ironically, there is no trade agreement with China which in effect means goods arrive in the European Union without any adherence to human rights nor sustainable development. This puts the full responsibility of due diligence on the European businesses choosing to have their supply chain outside of the EU – Absurdly, there is no accountability for the EU Commission to justify why it fails to act responsibly against countries with known violations.
Various initiatives at international level, such as the ones adopted by the United Nations (UN), the Organisation for Economic Cooperation and Development (OECD) and the International Labour Organisation (ILO), highlight companies’ duties to behave responsibly and respect human rights. The UN Global Compact, in particular, supports companies in carrying on their businesses responsibly, by aligning their strategies and operations with the UN’s Ten Principles on human rights, labour, environment and anti-corruption – The UN Guiding Principles”.
Whilst all these initiatives, including additional ones suggested by the Commission have been recommended for businesses they are not yet an obligation under EU law. Nonetheless, businesses could be better supported to carry out business responsibly and perform CSR if the Commission acted directly against those countries conducting trade with the EU who repeatedly violate international legislation. Until the European Commission also takes on its responsibility, workers in third countries will continue to suffer at the hands of their governments and many businesses in Europe will have their brands destroyed as savvy consumers turn away for those companies failing to live up to their CSR commitments.
Photo Credit : https://www.interregeurope.eu/road-csr/