Investor Statement in Support of Mandated Human Rights and Environmental Due Diligence in the European Union
The EU is currently awaiting a legislative proposal from the European Commission on Sustainable Corporate Governance that among other things would require companies to account for their human rights and environmental impacts or possibly face legal and administrative consequences.
At present, only a minority of companies demonstrate the necessary willingness and commitment to take human rights seriously. A 2020 ranking by the Corporate Human Rights Benchmark found that nearly half of the 230 largest publicly traded companies in high-risk sectors received a score of zero when measured against five human rights due diligence indicators. The investors say reliance on the voluntary actions of companies is no longer adequate.
On October 7, 2021, a group of 94 investors with more than US$6T in assets under management and advisement reaffirmed via a public statement their support for mandated human rights and environmental due diligence in the EU.
Whether the upcoming EU directive on corporate due diligence will make an actual difference on the ground will depend on the details of this legislation. For this reason, investors and civil society have been calling on the Commission to make sure the directive ensures corporate accountability for human rights and environmental impacts through administrative and civil liability, and access to remedy for affected people. The investors say the involvement of directors is paramount to ensure that the necessary strategic decisions are made and integrated into overall corporate strategies and business operations.