Can a new EU law help communities hold businesses to account?

Arianne Griffith is corporate accountability campaign lead for Global Witness.

In the early hours of Thursday morning, the European Union agreed a landmark law that would have been unimaginable a decade ago. It paves the way for people around the world to take companies to court in Europe for environmental damage and human rights abuses.

Companies have enjoyed near total impunity for wrecking the planet, displacing communities and abusing workers in pursuit of profit, but people now have a powerful new way of fighting back.

This mouthful of a law – the Corporate Sustainability Due Diligence Directive or CSDDD – aims to drive more sustainable business practice. It requires large companies operating in the EU to respect human rights and the environment wherever in the world they operate.

If they don’t, we can expect to see more court cases holding them to account.

Time and again, taking big companies to court has been a near-impossible hill to climb, particularly for people in the Global South. By clearing away some of the barriers that have prevented people from taking legal action, this law can help turn the tide. 

For example, courts will be able to ask companies to disclose more evidence, and affected communities will have at least five years to bring their cases before courts. This will help to reset the imbalance of power that often makes it impossible to build a case against companies that withhold the evidence victims need to support their claims. 

In February, Global Witness identified how hundreds of residents were displaced to make way for a new mega-airport in the Philippines after a botched ‘consultation process’ in which residents reported that armed soldiers went door-to-door, leaving community members feeling “terrified”.  

New binding requirements on companies to meaningfully consult with communities and respect the rights of those affected by their activities will drive more sustainable business practices. This means companies won’t be able to intimidate or displace communities to push through their dangerous projects or withhold key information from them. 

Significantly, big companies will also be legally required to act on climate change. They will need to write and put into effect climate transition plans, which will put Europe’s biggest corporate players – including fossil fuel majors – on a pathway towards reducing their emissions in line with the Paris Agreement and the EU’s climate targets. But the law does not go far enough to hold companies accountable on climate and guarantee the action we urgently need.

Still, these are significant changes that could be transformative for communities around the world. 

The law could have delivered so much more – were it not for an alliance of countries led by France and Germany that undermined its ambition. President Macron’s representatives reportedly led the charge to give a free pass to the financial sector. If you live in the EU, your bank remains free to invest in new oil and gas fields fuelling climate breakdown, and in projects linked to brutal conflict.  

And they do. Europe’s banks have helped fossil fuel companies raise more than €1 trillion since the Paris climate Agreement was adopted in 2016. And last month we showed how European banks and investors are investing over €700m in companies tied to brutal violence against civilians in South Sudan.

The law should have undoubtedly gone further on finance and climate but make no mistake about it – it is a gamechanger, and only exists because a huge movement has been demanding it for years.

In 2021 over half a million people from around the world wrote to the European Commission asking them to introduce a strong law, and we’ve worked with other NGOs in Brussels and beyond to push for just that. Big business fought against it tooth and nail the whole way.

While the financial sector may have been let off the hook this time, the powerful movement that helped get this law passed will go into 2024 fighting to make sure it doesn’t happen again.  

There’s no turning back now – this was hard won progress, and it’s only the beginning.