Gearing up for fair globalisation and accountable business

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Every day goods produced by European companies abroad enter the internal market, tainted by serious human rights violations. [Solidarity Center/Shutterstock]

This article is part of our special report Upping the ante on human rights due diligence.

Every day goods produced by European companies abroad enter the internal market, tainted by serious human rights violations. Be it child labour in cocoa supply chains, chemical poisoning in the electronics sector, or forced evictions and environmental devastation from mining. Rights violations stemming from EU business operations abroad impact millions.

Heidi Hautala is Vice President of the European Parliament, Chair of the European Parliament’s working group on Responsible Business Conduct.

Jude Kirton-Darling is Member of the European Parliament, Member of the International Trade Committee.

In Pakistan, Saeeda Khatoon’s teenage son, Aijaz Ahmed, was producing jeans for a German textile brand when the Karachi textile factory caught fire. The utter lack of fire safety measures together with barred windows and locked gates, meant that he and roughly 260 other workers were burnt alive at their machines. Just twenty days before, the factory had been certified fire safe by an Italian auditing company.

As the past decades have unfolded, stories like Saeeda’s have become routine, almost to the point of tedium. The weekly incidents of persons killed, harmed or displaced by European business operations go unreported.

They continue because the current rules for corporate accountability do not match the current reality of the global economy. Rules for business accountability and responsibility have not kept pace with the rights and freedoms legally granted to business by globalisation. The accountability gap persists in spite of the modern European citizens’ understanding that to profit from the misery and harm of others is both inhumane and unconscionable.

We know, for instance, that forced labour in global supply chains is generating $150 billion a year in profits whilst delivering goods for sale to EU consumers. These massive profits are going to businesses not undertaking human rights due diligence; who do not afford the time and effort to ensure their supply chains are free from human rights violations.

Efforts of a small group of responsible business front-runners are thereby undermined. They are left at a competitive disadvantage. Responsible business is currently even dis-incentivised by market forces. Systemic progress remains hamstrung.

Today’s rules continue to facilitate a race to the bottom when what we desperately need – if we are to have any realistic hope of delivering on the Sustainable Development Goals – is a business race to the top. To its discredit, the EU has waited in order to be proven the hard way that regulation is, necessary for ensuring that change really takes places.

Last week the cross-party European Parliament Working Group on Responsible Business Conduct invited Saeeda Khatoon to share with us the reality inside factories that produce for European businesses and consumers. In return, we put forward a comprehensive plan for the EU to drive a truly responsible and accountable European business sector.

There needs to be a certainty that rules are equal, and outcomes for victims and responsible businesses are fair. EU needs to ensure an effective legal right of redress, whilst levelling-up the responsible business playing field.

A centrepiece is a corporate duty to undertake human rights due diligence, and a right of remedy for those harmed by the failure of doing so. Such laws have already been passed, enshrining the internationally recognised corporate responsibility to “do no harm”, and future laws are currently being debated by parliaments around Europe and the world.

Our Shadow EU Action Plan on Responsible Business Conduct outlines the regulatory measures to be taken by putting the “do no harm” and remedy principles into law. The time is now for the European Commission to progress this legislative agenda. Passed in 2011, the United Nation Guiding Principles on Business & Human Rights require state regulation as an essential means to achieving responsible business conduct and overcoming victims’ barriers to redress.

Enabling re-location and outsourcing of operations abroad, needs to be paralleled by updated corporate accountability rules. A continuing accountability gap will keep on delivering unethical profits, such as the $150 billion a year from forced labour, while leaving a systemic change paralysed. Things will not change unless Europe moves to change them.

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