The European Parliament has called for companies that violate human rights to be prosecuted in the future and for products to carry an “abuse free” label. But the vagueness of its proposal has already left plenty of loopholes open. EURACTIV Germany reports.
Flooded homes, livestock washed away, people forced to live in temporary shelters: the Merowe Dam in Sudan, the construction of which was managed by a German company, has been a fiasco.
Lahmeyer International is even accused of concealing from the affected population the fact that there would be flooding as a result of building the dam. A case filed by the victims with a Frankfurt court in 2010 remains unresolved and the company denies any wrongdoing.
Cases like this would have been in the back of MEPs’ minds when they Tuesday (25 October) demanded stricter rules for companies with foreign operations.
There was “deep concern” in the Parliament that European companies do not approach human rights sufficiently when doing business outside of the EU. The adopted text even said that “some EU companies” have explicitly breached human rights or have ignored their duty of care.
The Parliament therefore wants to clamp down on what it calls “global maladministration” with this new resolution. Companies have a “moral and ethical obligation” to respect human rights, said the text, adopted on two days ago. It made particular mention of social and workers rights, as well as the right to union representation.
Another item on the MEPs’ list of demands concerns European trade policy: in all future trade deals with non-EU states, a dedicated passage should be allocated to reminding companies of their social responsibilities. The Parliament also suggested a label for produce destined for the EU that would confirm whether it has been produced “abuse-free” during “all stages of production”.
The fact that the non-binding resolution was adopted by such an overwhelming majority (569 in favour, 54 against and 74 abstensions) is most likely because the text is quite vague on some crucial points.
In particular, it does not go into detail about who the main culprits are, where they operate or which EU countries should be investigated. Neither does the text make mention of what kinds of human rights violations it intends to tackle.
“Different groups worked on the text; we had to find a compromise,” said ALDE’s Renate Weber when asked by EURACTIV.de about the resolution. “Therefore, we have refrained from mentioning specific human rights abuses,” she added.
Although the text in many places directly holds companies responsible for rights abuses, the MEPs left open a loophole in which the obligation to respect the human rights of the local people will be pursuant to the “size and capacity of the company”.
There will therefore be a certain amount of doubt as to whether companies are simply uncaring about human rights or whether they lack the personnel necessary to carry out a proper impact assessment.
Weber insisted that many MEPs were not just thinking about European companies when they adopted the resolution, rather they were concerned with firms from other continents.
“We don’t want to give the impression that European companies are the worst in the world,” she told EURACTIV.de. On the contrary: “Our focus is on companies and countries from outside Europe.”
In addition to hopes of greater corporate responsibility, the Parliament also promoted the economic benefits of human rights checks. If the EU actually manages to enforce social standards in foreign investment, not just EU-wide but also for non-European companies, then European companies would not have much to fear from a competitive disadvantage anymore.
According to EPP MEP Andrzej Grzyb, an “equalisation of competitivity between European and non-European companies” could lead to a reduction of outsourcing jobs.
But a global agreement on social investment standards is still a long way off. Previously, it has been the EU institutions themselves that have been tasked with implementation, hence why the Parliament’s call for more social responsibility is non-binding. As long as the European Commission drags its feet, nothing much is going to change.