What will the European Commission’s proposed Corporate Sustainability Due Diligence Directive mean for the human rights of indigenous peoples and of local communities?

On 23 February 2022, the European Commission adopted a proposal for a directive on corporate sustainability due diligence. This long-awaited legislative proposal was supposed to “enable companies to focus on long-term sustainable value creation instead of short-term benefits” and “better align the interests of companies, their shareholders, managers, stakeholders and society”.[i]  Unfortunately, in FPP’s view, the detail does not live up to its promise. FPP analyses the proposal and its potential impacts for forest peoples, including the many gaps to fill to ensure an effective protection of the rights of indigenous peoples and local communities.

Read the full briefing in English, French, Spanish and Bahasa Indonesia.

These are some of the major limitations identified by FPP and its partners in the proposal:

Insufficient human rights coverage

The proposal requires businesses to conduct due diligence in relation to “adverse human rights impacts”. However, it doesn’t cover equally the full range of human rights protected under international law. Instead, it sets out a short list of specific rights that must always be addressed by companies. Then it creates a “catch-all” list of other human rights instruments that companies should also assess, but only where there they can identify a particular risk. In practice, this is likely to lead to a two-tier system where the bulk of due diligence focusses on the small number of rights set out in the list, and other rights are neglected.

The list of 20 rights does include indigenous peoples’ rights to lands, territories and resources under UNDRIP. It includes much more limited land rights for non-indigenous peoples. It also excludes other key, connected rights of indigenous and forest peoples, including the right to self-determination, the right to culture, the right to health, or the principle of free, prior and informed consent.

The directive should instead expressly and equally require companies to conduct due diligence in respect of the entire spectrum of internationally-recognised human rights.

Impacts on forest peoples mostly neglected in the value chain coverage

In many circumstances, due diligence obligations for companies within the scope of the directive may not apply to the entire value chain. This is because due diligence requirements for companies to address impacts of their business partners are limited to “established business relationships”, which may well exclude suppliers located far upstream in the value chain. Corporate impacts on forest peoples are often at the upstream end – which means corporate impacts affecting them will fall out of scope of the directive.

This approach could also incentivise companies to shift their operations towards short-term business relationships (e.g. buying on spot markets), or moving towards more intermediaries in risky supply chains, in order to avoid due diligence obligations.

The directive should unequivocally require due diligence on the full value chain of corporate activities.

A process-based directive, with no obligations of outcomes

The proposal sets out requirements for companies to identify, prevent, mitigate and cease adverse human rights impacts – but the obligations are of process not of outcome. That is to say, provided companies take the steps set out in the proposal, they will be considered to have adequately addressed impacts, regardless of whether the adverse human rights impacts have been addressed in reality. The obligations to “prevent” and “cease” only apply where this is “possible”, creating a potentially big loophole where companies can knowingly continue to buy products or services linked to human rights impacts because, for example, it is not feasible from a business perspective to cease supply, or because the business considers it does not have leverage to change practices on the ground. Companies in this case may need to “mitigate”, but again only to the extent this is possible. This approach fundamentally undermines the fact that purchasing goods and services without taking account of their human rights impacts is itself a major driver and facilitator of human rights violations.   

Prevention is especially critical for indigenous and forest peoples. One of the most widespread human rights impacts on forest peoples is violation of land rights (land grabbing). Taking land often causes irreparable harm, because restitution of stolen land is extremely difficult in practice.  

The directive should go beyond a mere process to hold companies accountable for human rights outcomes,  by requiring companies to demonstrate that human rights impacts are in fact prevented and progressively removed from their operations and value chains.