January 24, 2023
“EU Committee vote a step in the right direction towards strong business and human rights law” – Chris MacManus MEP

“EU Committee vote a step in the right direction towards strong business and human rights law” – Chris MacManus MEP
 
Chris MacManus, Sinn Féin MEP for the Midlands Northwest, has welcomed the efforts of the European Parliament’s Economic Affairs Committee to improve the draft EU law on business and human rights. MacManus and a majority of MEPs from the Committee voted in favour of amendments to the Corporate Sustainability Due Diligence Directive, which aims to hold European companies responsible for ensuring that there are no human rights violations or environmental abuses in their value chains. 
 
“The MEPs’ proposed changes to the draft law contain many improvements on the Commission’s original text,” said MacManus. “This should create a more robust law that really works to protect human rights and prevent environmental damage. It removes loopholes around what parts of a company’s value chain will be covered by the new law. It deletes the vague and controversial definition of “established business relationships” and underlines that contractual assurances with suppliers do not absolve a company of its responsibilities towards human rights.”
 
“Of particular note is the Committee’s approach to financial institutions. Many EU Member States, swayed by corporate interests, do not want financial institutions to be covered under the new Directive. The Economic Affairs Committee has clearly said that financial institutions must be held responsible for the activities of the companies they finance. Institutions like banks, insurers and pension funds must use their leverage as shareholders to improve the human rights and environmental records of the companies they invest in. This can go as far as terminating loans provided to companies that engage in human rights abuses.” 
 
“Our financial institutions have huge power to either legitimise companies’ activities, or hold them to account for their behaviour. For this reason, we need a legal requirement for financial institutions to investigate and respond to the human rights record of the companies they finance. This will have concrete results for impacted communities and human rights defenders around the world. If we had this kind of legislation back in 2016, for example, then European banks and investors would not have been able to unscrupulously finance the controversial Agua Zarca dam in Honduras, which had already been linked to human rights abuses when Danish and Finnish financiers backed the project. Disputes around this dam led to the murders of human rights defenders Berta Cáceres and Nelson García. ”
 
MacManus also highlighted some shortcomings of the proposals adopted by the Committee. “The proposals voted on today were a compromise between different political groups, and so do have some gaps. I would have preferred to see stronger frameworks and supports for individuals and civil society groups who want to raise a case of human rights or environmental abuses perpetrated by EU companies. The scope of the Directive remains unchanged, meaning that it will only apply to the very largest companies. Finally, there is very little requirement for companies to assess and mitigate the climate change impact of their activities.”
 
MacManus concluded, “Nevertheless, this is an overall strong position that is markedly in contrast to the position of Member State governments who want to weaken this new law. This is a clear signal from the Economic Affairs Committee, especially as regards the inclusion of financial institutions. I would call on MEPs in other committees to embrace this position, to ensure that the European Parliament stands in defence of human rights and environmental protection across the world.” ENDS
 
Notes to the editor
The Economic and Monetary Affairs committee voted on its opinion on the Corporate Sustainability Due Diligence Directive on 24 January. The committee has exclusive competence on issues relating to financial institutions, so the amendments that the Committee proposed on these topics will be included in the Parliament’s final position on the Directive. Other aspects of the legislation will be amended by the Legal Affairs committee, and the combined inputs of the committees will be voted on by all MEPs at an upcoming plenary session of the European Parliament. 
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