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EU law on corporate liability

Legally binding requirements for businesses

Background

Human rights and environmental violations in the supply chain are widespread and occur in virtually all global supply chains and in all sectors. Testimonies from people affected by the actions of European companies remind us of this reality almost daily. Often it is about unsustainable wages, child labor, excessive working hours, lack of trade union freedoms and sexual harassment. Women workers are particularly vulnerable. Over the years, Oxfam has been able to show that the people who grow the food on our tables, including rice, vegetables and fruit, have almost no control over their situation and rarely have a living wage, while the companies make huge profits - and at the same time do not have to answer for the violations they contribute to.

Today, there are no legal requirements that prevent Swedish and European companies from using suppliers that violate human rights and destroy the environment. However, in 2020, the EU initiated legislation and the European Commission was expected to present a proposal.

 

"We need to move fast. The corona crisis is a painful reminder of the importance of creating a fair society and economy. Corporate failures are now coming to the surface and unregulated global supply chains are having a negative impact on people and society."

- Didier Reynders, EU Commissioner for Justice, statement spring 2020

 

 

February 2022: legislative proposal

On February 23, 2022, the European Commission released the long-awaited legislative proposal on corporate responsibility for human rights and the environment. However, it was disappointing that the proposal presented only covered the very largest companies in terms of turnover and number of employees. In practice, this means that 99% of EU companies would escape direct liability.

The proposal established that companies have responsibilities throughout their supply chain, with some exceptions that would allow companies to circumvent some of those responsibilities. These restrictions are a betrayal of all those who fought for the legislation. Ultimately, it is a betrayal of the people whose lives, families and communities are too often exploited due to corporate negligence in a system that promotes financial gain over people and the environment. Oxfam criticized the proposal and we also wrote a joint comment with several other Swedish civil society organizations.

 

"A law that applies to all companies and all sectors, without exception, and where responsibility extends through the entire supply chain with no possibility to escape responsibility. Only then can the systematic violation of human rights and the environment truly end."

- Hanna Nelson, Head of Policy, Oxfam Sweden, February 23, 2022

 

December 2022: Council of Ministers vote

When European ministers met on 1 December 2022 to vote on the European Commission's legislative proposal, it was further weakened, which we strongly criticized in a press release. We particularly criticized Sweden's statement on the civil liability of companies. Among other things, the ministers' version means that the civil liability of companies is weakened, the liability of the financial sector becomes voluntary and the requirements for companies to combat the climate crisis are substandard. In practice, this would mean that the law would hardly make any real difference for those affected by corporate violations.

 

"Today, EU countries watered down what could be a historic proposal to reduce the risk of corporate human rights abuses and environmental degradation. This is a loss for all women and men who currently work in terrible conditions around the world to produce the goods that end up in our shopping carts. The only ones who can celebrate today are corporate lobbyists."

- Hanna Nelson, Policy Manager, Oxfam Sweden, December 1, 2022

 

Together with five other organizations, we expressed our criticism of Sweden's position in a debate article on 12 January 2023.

 

June 2023: Vote in the European Parliament.

This spring, committees in the European Parliament voted on changes to the draft law and whether work on the legislation should even continue. The results were mixed, with some committees voting positively and others voting for more watered-down legislation. On June 1, they all met and voted in favor of the legal committee's proposal. See Oxfam's commentary here.

 

Today, EU lawmakers sent double signals to people affected by corporate violations of human rights and the environment. While it is good news that a majority in Parliament voted in favor of an EU directive, the proposal is flawed, as it leaves most companies outside the law, and people exploited by companies will have to continue to fight for redress and justice.

- Hanna Nelson, Head of Policy, Oxfam Sweden, June 1, 2023

 

 

Autumn 2023: trialogues

During the fall of 2023, the European Commission, the European Parliament and the Council of Ministers sat in trialogues, where they discussed the draft law among themselves. Oxfam Sweden, Fairtrade Sweden, Swedwatch, the Swedish Society for Nature Conservation and ForumCiv all agreed that the Parliament's proposal was closest to the international standards and we therefore urged Sweden to work for the adoption of that version.

Read our full position here.

 

and therefore we urge Swedish decision-makers to work to ensure that the Council meets the Parliament in the parts that deal with ensuring that the directive is in line with international standards.

- From the Common Position, August 2023

 

Read Tidningens Syre's article on the position here. 

 

 

December 2023: legislation agreed

On December 14, 2023, the entire EU agreed on final legislation. This is a milestone achieved and Oxfam welcomes the decision. However, the draft law is heavily watered down.

 

First, the law will leave out 99% of companies - and exempt too many companies in sectors rife with labor rights violations. Second, France protected banks and investors so they can continue to invest in human rights violations and environmental degradation. Thirdly, Germany managed to make it difficult for people affected by corporate human rights abuses to get redress and access to justice in court, by ensuring that the scales are tipped in favor of companies.

- Marc-Olivier Herman, Policy Officer, Economic Justice, Oxfam in the EU

 

Read Oxfam's full position here.

 

What does Oxfam do?

Together with other organizations in Sweden and Europe, we put pressure on politicians and companies to work for strong legislation that includes all companies regardless of size, that requires responsibility throughout the supply chain, that requires companies to take civil responsibility and where the climate is given the necessary place. We are working to ensure that the legislation will truly represent a paradigm shift in the issue of corporate responsibility for human rights and the environment, and not just become a legal text full of loopholes where the reality for those who are exposed does not change.

 

Read more about Swedish civil society's work on corporate responsibility on CONCORD Sweden's website.

 

Read more about our work

Corporate responsibility