ethics - economics, law eelp - ruhr-uni-bochum.de

An Ethical Analysis of the European (and Particularly the

German) Implementation of the United Nations Guiding

Principles on Business and Human Rights Regarding Climate

Change Commitments for Multinational Companies

Seminar Paper (handed in September 2020)

Seminar: Ethics of Climate Change, winter semester 2019/20 (Dr. Johannes Graf Keyserlingk)

Author: Alexandra Witzel

Copyright notice: Alexandra Witzel, MA student in the international MA study programme

Ethics – Economics, Law and Politics, Ruhr-Universität Bochum, December 2020

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Ethics - Economics, Law

& Politics EELP

Int. MA study programme Ruhr-Universität Bochum

Summary

This paper analyses the German implementation of the UNGPs regarding climate change

commitments for companies and addresses the current debate on an international, European,

and German level surrounding proposals for a binding law relating to the due diligence

requirements of multinational companies. The paper asserts that, due to its non-binding nature,

the current implementation of the UNGPs does not sufficiently protect human rights and the

environment and that therefore a “smart mix” of non-binding and binding laws is necessary. It

also argues that environmental factors are not taken into sufficient consideration in the Draft Key

Points of the German Due Diligence Act.

Table of Contents

1 Introduction ……………………………………………………………………………………………………………………….. 4

2 The Interconnectedness between Human Rights and Climate Change ………………………….. 4

3 The Responsibility of MNCs in Mitigating Climate Change ……………………………………………… 7

3.1 The Ethical Responsibility of MNCs ………………………………………………………………………………….. 8

3.2 The Legal Responsibility of MNCs …………………………………………………………………………………….. 8

4 The Current Regulatory Framework …………………………………………………………………………………. 9

4.1 The UN Guiding Principles …………………………………………………………………………………………………. 9

4.2 The European Implementation of the UNGPs ………………………………………………………………… 10

4.3 The National Action Plan in Germany …………………………………………………………………………….. 11

5 Proposals for a Binding Law …………………………………………………………………………………………… 11

5.1 The Draft UN Treaty on Business and Human Rights …………………………….………………………. 11

5.2 The EU Human Rights Due Diligence Legislation …………………..………………………………….…… 12

5.3 National Due Diligence Laws ………………………………………………………………………………………… 13

5.4 The German Due Diligence Act (Sorgfaltspflichtengesetz) ……………………………………………. 13

5.5. Should a Binding Law be Implemented on the International, Regional or National Level?....15

5.6 Should MNCs be Held Accountable for their Supply Chains under Binding Law? ..………. 16

6 Conclusion ……………………………………………………………………………………………………………………….. 17

7 References ………………………………………………………………………………………………………………………. 18

Alexandra Witzel: An ethical analysis of the European (and particularly the German) implementation of the United

Nations Guiding Principles on Business and Human Rights…

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1 Introduction

In 2011 the United Nations Human Rights Council unanimously adopted the UN Guiding Principles

on Business and Human Rights (UNGPs) developed by Professor John Ruggie, the former Special

Representative of the Secretary-General on the issue of human rights and transnational

corporations and other business entities (Augenstein et al 2018, p.2). The UNGPs provide a non-

binding, international framework “to prevent, address and remedy human rights violations

committed in business operations” (Zamfir 2018, 2).

This essay analyses the German implementation of the UNGPs regarding climate change

commitments for multinational companies (MNCs) and addresses the current debate on an

international, European, and German level surrounding proposals for a binding law relating to

the due diligence requirements of businesses. The essay asserts that, due to its non-binding

nature, the current implementation of the UNGPs does not sufficiently protect human rights and

the environment and that therefore a “smart mix” of non-binding and binding laws is necessary.

It also argues that environmental factors are not taken into sufficient consideration in the Draft

Key Points of the German Due Diligence Act. Expressly mentioning environmental due diligence

requirements related to greenhouse gases could play an important role in mitigating climate

change and - despite the EU law most likely covering environmental due diligence - could help

pave the way for an EU law, which takes greenhouse gas emissions into account.

It is necessary to begin by explaining the interconnectedness between climate change and human

rights before proceeding to analyse corporate responsibility, the current regulatory framework

and the political debate surrounding binding laws.

2 The Interconnectedness between Human Rights and Climate

Change

A study by the British Institute of International and Comparative Law and LSE Consulting found

that “human rights and climate change processes often take place in silos” (Littenberg et al.

2020, p.2). This interconnectedness can be evidenced by the plethora of catastrophic events

related to global warming in recent years. Examples are the Australian bushfires, which

scientists confirmed were exasperated by global warming; the cyclones Idai and Kenneth, which

lead to more than a thousand deaths across Zimbabwe, Malawi and Mozambique; and the South

Asia floods, which resulted in over 12 million people fleeing their homes in the past year (Oxfam

International). According to the UN Environment Programme, “human rights and the environment

are intertwined; human rights cannot be enjoyed without a safe, clean and healthy environment;

and sustainable environmental governance cannot exist without the establishment of and

respect for human rights”.

Despite the UNGPs lack of specific reference to climate change, they have an impact on the

climate mitigation efforts of states and businesses by requiring companies to make efforts to

mitigate climate change because “business enterprises may not be able to discharge their

responsibility to respect all internationally recognized human rights unless they integrate

climate change considerations into their human rights due diligence processes” (United Nations



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Human Rights Office of the High Commissioner). Business enterprises can either have positive

effects on the human rights of employees or negative effects, such as polluting the environment

(UN Working Group on Business and Human Rights).

According to the global non-profit organization, Business for Social Responsibility (BSR), “the

impacts of climate change undermine the realization of a range of internationally recognized

human rights, including those dealing with life, health, food, adequate standard of living, housing,

property, and water” (BSR 2018). In Climate Change, Human Rights and Moral Thresholds, Simon

Caney (2010) supports this assertion and argues that “it is widely recognized that anthropogenic

climate change will have harmful effects on many human beings and in particular on the most

disadvantaged” (p.163). He therefore proposes to use the “human-rights approach” to address

climate change (p.164). His argument is that “climate change jeopardizes some key human

rights” - in particular, the right to life, to health and to subsistence (p.164). This human-rights

centred approach to analysing the impacts of climate change proposed by Caney “has far-

reaching implications for our understanding of the kind of actions that should be taken and who

should bear the costs of combating climate change” (p.164). In his article Caney seeks to prove

that even a “minimal conception” of the right to life, health and sustenance is violated through

the impacts of climate change (p.167-169).

This approach has also been implemented by the Human Rights Council, which held that “a

human rights-based approach should be integrated in any climate change adaptation or

mitigation measures” (UN Human Rights Office of the High Commissioner for Human Rights).

Some international regulations already make reference to this such as the Principle 1 of the 1972

Stockholm Declaration of the UN Conference on the Human Environment, which sets out that

“man has the fundamental right to freedom, equality and adequate conditions of life, in an

environment of a quality that permits a life of dignity and well-being, and he bears a solemn

responsibility to protect and improve the environment for present and future generations” (ibid).

Additionally, the Guidance Note on Integrating Climate Change Considerations in the Country

Analysis and the United Nations Development Assistance Framework incorporates a human

rights-based approach, requiring countries to take into account how predicted impacts of the

climate will interfere with economic and social development (United Nations Human Rights

Office of the High Commissioner of Human Rights). In 2018, the Framework Principles of Human

Rights and the Environment were published by the UN Special Rapporteur on Human Rights and

the Environment, John H. Knox. In these Framework Principles, Knox “urges States, international

organizations and civil society organizations to disseminate and publicize the framework

principles, and to take them into account in their own activities” (p.4). According to the

Framework, “environmental harm interferes with the enjoyment of human rights, and the

exercise of human rights helps to protect the environment and to promote sustainable

development” (p.7). In Principle 8, the Framework states that “Business enterprises should

conduct human rights impact assessments in accordance with the Guiding Principles on

Business and Human Rights” (p.12). Although the Framework Principles provide a promising set

of guidelines, it can be argued that further (binding) regulation is needed because vulnerable

communities are still at risk from the impacts of climate change, and appropriate human rights

regulations (especially for corporations) are lacking.



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The interconnectedness of human rights and climate change is exemplified by “situations

where business enterprises may be deemed to have caused adverse human rights impact”

(United Nations Human Rights Office of the High Commissioner 2012). An example of this is the

“systemic pollution” caused by the tech giant Apple in China (Hook and Hill 2011). Due to the

growing opposition to “environmental degradation as the cost of economic growth”, Chinese

environmental groups spoke out against the pollution in an NGO report (ibid). The NGO report

showed that “in the eastern Chinese city of Kunshan, air pollution from two electronics factories

prompted villagers to send their children to faraway schools” and that there were “increased

cancer rates” due to the two factories (ibid). In this case, the MNC, Apple, violated two human

rights - the right to education enshrined in the Universal Declaration of Human Rights (UDHR)

and the right to health, also enshrined in the UDHR.

In Human Rights, climate change and the trillionth ton, Henry Shue emphasises the

importance of rights-protecting institutions (2011). According to Shue, “human rights are an

expression of human solidarity” (p. 294) and are about “cooperating with others in solidarity to

create social institutions and practices that provide protection to others when they face dangers

they cannot handle on their own” (p. 295). In the article, Shue draws on Beitz’s “two-level model”

of protection for rights described in The Idea of Human Rights. Here Beitz explains that “the two

levels express a division of labour between states as the bearers of the primary responsibilities

to respect and protect human rights and the international community and those acting as its

agents as the guarantors of these responsibilities” (p.108). He clarifies that “when a national

government fails to carry out its primary responsibility to protect rights, responsibility defaults

to the second level consisting of the remainder of humanity, organized under the other national

governments and constituting the remainder of the international community” (Shue 2011, p.296).

According to Shue, because responsibility falls upon international institutions when national

governments fail to carry out their responsibilities under international law, international

regulations, such as the UNGPs, are of importance in the international sphere.

A counterargument to the human-rights approach could be made from a utilitarian standpoint

developed by Jeremy Bentham and John Stuart Mill (Bentham 1789, Mill 1861). From this point

of view, an argument in favour of business-as-usual supply chains, which violate human rights,

could be defended. If the most moral choice of action is the action that maximizes the greatest

amount of happiness for the most people, then it could be argued that sweatshops maximize the

“happiness” of consumers, the population of which outweigh the number of sweatshop workers.

According to Orendorff, it “can be realistically assumed that the total number of consumers of

sweatshop products in the world, estimated to be 1.2 billion by 2020” outweighs the amount of

workers in sweatshops experiencing human rights violations (Ang et al. 2019, without page

numbers). However, due to the utilitarian approach being considered an outdated ethical theory

and due to the grave violations of human dignity which result from human rights violations in a

business context, applying a deontological approach in this context is preferable. In his article

Climate Change, Human Rights and Moral Thresholds, Simon Caney argues according to the

principle of lexical priority, and asserts that “human rights generally take priority over moral

values, such as increasing efficiency or promoting happiness” (Caney 2010, p.72). Therefore, “if

there is a clash between not violating human rights on one hand and promoting welfare on the



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other, the former should take priority” (ibid). Caney also quotes Henry Shue, who reiterates that

“basic rights are the morality of depths”, which “specify the line beneath which no one is allowed

to sink” (ibid). Caney distinguishes between an intrinsic approach to human rights, which is

advocated by the philosopher Thomas Nagel and grounded in the intrinsic respect that every

human being is owed. Kant also advocates for an intrinsic approach to human rights, through one

of his Categorical Imperatives, the Formula of Humanity, which requires humans to treat one

another as “ends in themselves” and not merely as “means to an end” (ibid). On the other hand,

there is also the instrumental approach, which is advocated by Amartya Sen and Martha

Nussbaum in the “capabilities approach”, which argues that human rights are important because

they ensure capabilities that are required in order for people to achieve well-being or “a decent

life” (ibid) which in turn determines what “kind of life they are effectively able to lead” (Stanford

Encyclopedia of Philosophy). Both the intrinsic and instrumental view of the human rights

approach “insists on the protection of the entitlements of all individuals and condemns any trade-

offs that would leave some below the minimum moral threshold” (Caney 2010).

To conclude this section, the political theorist and ethicist Alasdair Cochrane argues that the

interconnectedness between climate change and human rights “should be of little surprise, since

many of the concerns we have regarding the environment appear to be concerns precisely

because of the way they affect human beings” (Cochrane 2007, p.4).

3 The Responsibility of MNCs in Mitigating Climate Change

According to the Intergovernmental Panel on Climate Change (IPCC), the United Nations body

for assessing the science related to climate change, “global warming is likely to reach 1.5°C

between 2030 and 2052 if it continues to increase at the current rate” (IPCC 2018a, p.4). Panmao

Zhai, Co-Chair of an IPCC Working Group, stresses the importance of this by highlighting that we

are currently “already seeing the consequences of 1°C of global warming through more extreme

weather, rising sea levels and diminishing Arctic sea ice, among other changes” (IPCC 2018b,

p.1). As a result of the findings of institutions, such as the IPCC, and the plethora of examples of

the destructive effects of global warming (some of which were mentioned in the previous

section), climate change is widely accepted as an important issue. Consequently, there have been

legal obligations placed on states under international law through the United Nations Framework

Convention on Climate Change, particularly the Kyoto Protocol and the Paris Agreement

(Jentsch 2018). Much of the focus in international law and politics surrounding climate change

mitigation and adaptation has been placed on state responsibility (ibid). However, since

catastrophic effects of climate change will (and have already started) to “damage economies,

devastate populations, increase resource scarcity and dramatically impact the cost of doing

business”, companies’ cooperation in climate mitigation and adaptation efforts has been held to

be increasingly necessary (Mainwaring 2018). This can be seen, for example, by 150 companies

joining the RE100, a global corporate renewable initiative where companies commit to 100%

renewable power (RE100 website). According to the World Economic Forum’s Davos Manifesto

2020, which focuses on the universal purpose of a company in the Fourth Industrial Revolution,

a company’s performance “must be measured not only on the return to shareholders, but also



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on how it achieves its environmental, social and good governance objectives” (Schwab 2019,

without page numbers).

3.1 The Ethical Responsibility of MNCs

According to a report by the European University Institute, “the origins of the corporate social

responsibility movement are often traced back to Howard R. Bowen and his 1953 book on social

responsibilities of the businessman” (Jentsch 2018, p.1). In Social Responsibilities of the

Businessman, Bowen addressed the question of what responsibility businesses have in a social

context. Just ten years later, Joseph McGuire, the author of Business and Society, continued to

develop the idea that a MNC’s duties extend beyond mere economic duties and stated that “the

idea of social responsibilities supposes that the MNC has not only economic and legal obligations

but also certain responsibilities to society which extend beyond these obligations” (McGuire

1963, p.144). The concept of corporate social responsibility began to gain popularity in the United

States in the 1970s, and since then many companies started developing strategies to become

more “responsible” (ACCP). More recently, Archie B. Carroll, a professor at the University of

Georgia, developed the well-known Corporate Social Responsibility (CSR) Pyramid, which shows

that a “firm should strive to make a profit, obey the law, be ethical, and be a good corporate

citizen” (Carroll 1991, p.43).

There have, however, been opponents to the idea of corporate social responsibility, such as

Milton Friedman, a famous US-American economist, who in his 1962 work, Capitalism and

Freedom, stated that “there is one and only one social responsibility of business – to use its

resources and engage in activities designed to increase its profits as long as it stays within the

rules of the game, which is to say, engages in open and free competition without deception or

fraud” (Friedman 1962 in Jentsch 2018, p.1).

In A philosophical critique of the obligation to comply with the law in CSR, Marian Eabrasu

states that “most of the CSR scholars who disagree about various and sometimes fundamental

CSR topics will easily agree on the corporations’ law-abiding obligation” (p.1-2). She states that

this is also the case with Friedman, who acknowledges the legal responsibilities of MNCs.

3.2 The Legal Responsibility of MNCs

In his working paper for the European University Institute, Jentsch focuses on the legal dimension

of CSR and states that in the past “a large amount of research was [...] dedicated to the

relationship between corporate social responsibility and firm performance” and “it was not until

recently that these issues have become more popular in law and legal studies” (Jentsch 2018,

p.1). According to Jentsch, the law concerning CSR has shifted “from a largely self-regulating

system to a hybrid legal architecture consisting of non-binding international soft law standards

backed-up by some sort of government intervention and eventually to binding private law rules”

(ibid, p.2).

In this “hybrid legal architecture”, there are several non-binding legal instruments, which have

the purpose of holding companies accountable for their actions. Jentsch observes that “since the

mid-1970s [there has been a] rise of public and private codes of conduct, but no international

legally binding instrument on corporate social responsibility could emerge” (ibid). There has



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however been a non-binding international legal instrument, the UN Guiding Principles on

Business and Human Rights, which according to Jentsch has “arguably, the most prominent

position among these public codes of conduct” (ibid). However, it is worth noting the impact the

UNGPs have had on various international regulations. For example, updates were made to the

Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational

Enterprises to align it with the UNGPs (Faracik 2017, p.12, 14). Several other regulations were

also aligned with the UNGPs, such as the UN Global Compact, the International Standards

Organization ISO 26000, and the International Finance Corporation Performance Standards (ibid,

p.14). Due to its importance in the international legal system, this essay will focus on the UNGPs,

which will be addressed in more detail in the following section.

4. The Current Regulatory Framework

4.1 The UN Guiding Principles

In 2011 the Guiding Principles on Business and Human Rights were published by the United

Nations providing the first international guide (albeit its non-binding) for the responsibility of

businesses in relation to human rights. The UNGPs consist of three pillars relating to three types

of responsibilities: I. the state responsibility to make sure human rights are respected by

businesses, II. the corporate responsibility to respect human rights and III. the government's

responsibility to make sure it is possible for people affected by companies to file a complaint and

receive effective remedies. The second pillar of the UNGPs is grounded in recognition of “the role

of business enterprises as specialized organs of society performing specialized functions,

required to comply with all applicable laws and to respect human rights” (UNGP, p.1). According

to “Shift”, a non-profit organization and the leading centre of expertise on the UN Guiding

Principles on Business and Human Rights “the second pillar of the Guiding Principles provides a

blueprint for businesses to prevent and address negative human rights impacts” (Shift Project

Website). An important aspect of Pillar II is that MNCs need to perform due diligence (which is

enshrined in Principle 17 UNGPs). According to Principle 17, due diligence includes “assessing

actual and potential human rights impacts, integrating and acting upon the findings, tracking

responses, and communicating how impacts are addressed”. It is also important to note that

there are no “loopholes” for MNCs. This means that MNCs cannot “make up” for human rights

violations through philanthropy. According to Principle 13 of the UNGP:

The responsibility to respect human rights requires that business enterprises:

(a) Avoid causing or contributing to adverse human rights impacts through their own activities, and

address such impacts when they occur;

(b) Seek to prevent or mitigate adverse human rights impacts that are directly linked to their

operations, products, or services by their business relationships, even if they have not contributed

to those impacts.

As was established in the section on the interconnectedness of human rights and the

environment, activities which adversely affect climate change also have an adverse effect on

human rights. Thus, it can be assumed that the “activities” referred to in Principle 13(a) also

include activities related to climate change, such as greenhouse gas emissions and pollution,



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which contribute to adverse human rights impacts. Principle 13(b) extends the responsibility to

supply chains by stating that businesses are also responsible for the human rights violations,

which are linked to their business, even if it was not caused by them directly.

The UNGPs provide a step in the right direction; however, it can be argued that they do not go

far enough in protecting human rights since they are voluntary “normative provisions contained

in non-binding texts” (Shelton 2000 in Low 2015, p.1). According to Zamfir, “dissatisfaction with

the slow and ineffective implementation of the UNGPs – though they were much acclaimed at

the time of their adoption – has driven the initiative to draft a binding international treaty” (Zamfir

2018, p.5). This is because “the limits and shortcomings of the UNGPs have been widely

recognized by both governments and civil society organizations” and “their non-binding character

has been portrayed as a particular weakness” (ibid).

4.2 The European Implementation of the UNGPs

A 2017 study titled the Implementation of the UN Guiding Principles on Business and Human

Rights affirmed that “the UNGPs saw an uptake at the regional level with the EU, the Council of

Europe (CoE) and the Organization of American States (OAS) all undertaking concrete measures

to support the UNGPs” (Faracik 2017, p.15). According to the Council of the European Union, the

UNGPs are “the authoritative policy framework in addressing corporate social responsibility” in

Europe (Council of the European Commission 2015). The UN Guiding Principle 1 asserts that

“states must protect against human rights abuse within their territory and/or jurisdiction by third

parties, including business enterprises”. To do so, they can take “appropriate steps to prevent,

investigate, punish and redress such abuse through effective policies, legislation, regulations and

adjudication”. The UNGPs are implemented via National Action Plans in the EU Member states,

which are defined as “an evolving policy strategy developed by a State to protect against adverse

human rights impacts by business enterprises in conformity with the UN Guiding Principles on

Business and Human Rights” (UN Working Group on Business and Human Rights 2014, p.3).

In 2019, the European Commission published a report that shows the developments the EU

has made. It emphasizes that “EU citizens expect that companies understand their positive and

negative impacts on society and the environment and prevent, manage and mitigate any negative

impacts that they may cause, including in their global supply chains” (European Commission

2019, p.5). According to a report by the European business network CSR Europe and the

independent organization GRI, the policy trend on the regional and national level has “an

observable junction with the adoption of the UNGPs” (CSR Europe and GRI 2017, p.13). An

example of a policy trend on the regional level is the Directive 2014/17/EU and its national

transpositions, which “serve as leading examples of due diligence disclosure requirements” (ibid).

“The introduction of the groundbreaking EU Directive on the disclosure of non-financial and

diversity information (Directive 2014/95/EU) has set a clear course towards greater business

transparency and accountability on social and environmental issues” (CSR Europe and GRI 2017,

p.5). According to the same report, “the practice of reporting can help companies move from

merely complying with legal requirements, to actively enhancing their responsible business

conduct (RBC) and making a contribution towards building a more sustainable future” (ibid). The

hosts of the UNGPs stated in their Conference Conclusions that “the EU has the potential to be



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an international game changer when it comes to business and human rights” (Faracik 2017, p.1).

However, the European Parliament states that “less declaration and more real political will is

needed on the side of governments, as so far their commitments to develop National Action Plans

(NAPs) implementing the Guiding Principles have been far too slow to materialize” (Faracik 2017,

p.8).

4.3 The National Action Plan (NAP) in Germany

As part of the German National Actionplan and UNGPs, the government surveyed 2250

corporations on the extent to which they are securing the minimum required social and

environmental standards in their global supply chains and only 455 companies participated

(Spiegel 2020c). The survey showed a discouraging result: only 13-17% of German companies

follow the requirements set out by the National Actionplan, which is based on the UNGPs

(Business & Human Rights Resource Centre).

To conclude this section, it can be argued that the current implementation of the UNGPs

shows that the current non-binding regulatory framework is not sufficient in securing businesses’

compliance with proper human rights and environmental standards in their supply chains. Thus,

the next section will address the proposals for a binding law on an international, regional, and

national level.

5. Proposals for a Binding Law

5.1 The Draft UN Treaty on Business and Human Rights

To address the issues surrounding the non-binding regulations, “there are ongoing efforts to

advance due diligence laws under a proposed legally binding UN treaty on business and human

rights” (Wilkes 2019). In June 2014, the UN Human Rights Council adopted Resolution 26/9,

which establishes “an open-ended intergovernmental working group on transnational

corporations and other business enterprises with respect to human rights, whose mandate shall

be to elaborate an international legally binding instrument to regulate, in international human

rights law, the activities of transnational corporations and other business enterprises”.

In the summer of 2014, “the UN Human Rights Council first voted to begin negotiating a legally

binding instrument to regulate, in international human rights law, the activities of transnational

corporations and other business enterprises” (Zorob 2019). In the summer 2020, Ecuador

published a Draft UN Treaty on Business and Human Rights, which will be analysed and

discussed at the fourth round of treaty negotiations in October 2020. However, Associate

Professor of Law at Wageningen University, Nadia Bernaz, states that the Draft treaty “covers

the international obligations of states, and states only” (Bernaz 2020). Despite the main body of

the treaty exclusively making reference to State responsibility, the preamble does state that “all

business enterprises, regardless of their size, sector, operational context, ownership and

structure shall respect all human rights, including by avoiding causing or contributing to adverse

human rights impacts through their own activities and addressing such impacts when they

occur”. This is a step in the right direction. However, it can be argued that since it is generally



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agreed that the preamble of a treaty cannot be legally binding, this does not go far enough in

holding MNCs responsible for their climate change and human rights related commitments.

This is arguably problematic due to corporations' large amounts of environmental pollution and

human rights violations. For example, the German news magazine Spiegel reported that German

companies are continuously involved in the violations of human rights and the destruction of the

environment abroad through their supply chains. Examples include contamination of the ground

in Argentina due to the promotion of natural gas fracking and pollution in the waters in China

through textile production. (Spiegel 2020b)

Bernaz advocates “for the inclusion of international corporate criminal liability for

international crimes in the treaty” (Bernaz 2020). China and Russia oppose this and maintain “a

critical view of the draft or the very objective of negotiating a new instrument” (Bellion-Jourdan

2019). On the other hand, countries such as Cuba and South Africa “expressed their serious

concern with the growing number of corporate-related human rights violations around the world”

(European Coalition for Corporate Justice 2019). South Africa “expressed the need for

multilateralism in such uncertain global times, and that only through the process of active

engagement and negotiation can the existing open issues within the text be resolved and

developed” (ibid). The European Union, however, “announced from the beginning of the session

that it would not engage in the negotiations in the absence of a mandate from Member states”

(CIDSE 2019, without page numbers). The EU stated they “would limit their interventions only to

asking clarifying questions” (ibid), resulting in “limited participation in the Geneva negotiations”

(ibid). However, “in contrast to the overall reluctance from states, civil society continues to be a

driving force for a legally binding instrument, with hundreds of organizations united under the

“Treaty Alliance” network” (Bellion-Jourdan 2019). According to the website of the Treaty

Alliance, the alliance is made up of 1500 individuals and 1100 organizations, who “call on states

to actively participate in upcoming negotiations of the international treaty to ensure protection

of human rights from the activities of transnational corporations and other business enterprises”

(Treaty Movement). These disagreements and differences in views amongst states and civil

society could make it difficult to reach an agreement. However, the Chairperson-Rapporteur at

the 5th session of the United Nations (UN) Human Rights Council Intergovernmental working

group mentioned in his closing remarks that “it is on us all to work to reach the highest level of

consensus possible and to culminate with a successful negotiation of an international instrument

that reflects the aspirations of the whole international community” (Bellion-Jourdan 2019). It

will be interesting to see the developments that will be made in the next set of negotiations that

will take place in October 2020 and whether the EU will play a more active role then.

5.2 The EU Human Rights Due Diligence Legislation

The EU proposal calls for mandatory legislation regulating the due diligence of human rights by

requiring “businesses to carry out due diligence in relation to the potential human rights and

environmental impacts of their operations and supply chains” (Norton Rose Fulbright 2020,

without page numbers). In the spring of this year, the “EU Commissioner for Justice Didier

Reynders announced that the European Commission will introduce mandatory human rights due

diligence legislation in the first quarter of 2021”, which “will be part of the EU’s COVID-19



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recovery package and the European Green Deal” (Littenberg et al 2020, p.1). Overall, a study

carried out by the British Institute of International and Comparative Law and LSE Consulting

(Littenberg et al 2020), found that “the introduction of mandatory due diligence requirements

would yield the greatest positive impact in terms of reducing the adverse human rights impacts

of businesses and their supply chains” (Norton Rose Fulbright 2020). The study also emphasized

“that any new law ought to be cross-sectoral and applicable to all businesses, regardless of their

size” (ibid), which would mean that the law includes MNCs but would also extend to smaller

corporations. Unlike the Draft UN Treaty on Business and Human Rights, the proposed EU

legislation, if implemented, would apply directly to business. However, due to the various

member states needing to discuss and agree on legislation, Lia Polotzek from the organization

BUND in Germany argues that on an EU level, the process to negotiate legislation could take

years and therefore Germany, as a strong economy, should take the lead when it comes to

binding regulation (Spiegel 2020b).

5.3 National Due Diligence Laws

There have been initiatives on the national level to enshrine a due diligence duty into national

laws. France, for example, implemented the Loi de Vigilance in 2017, which “combines hard law

with (international) soft law standards on business and human rights and introduces an

unprecedented corporate duty of vigilance in French tort law” (Lavite 2020). According to Article

1 of the Loi de Vigilance, “the plan shall include the reasonable vigilance measures to allow for

risk identification and for the prevention of severe violations of human rights and fundamental

freedoms, serious bodily injury or environmental damage or health risks resulting directly or

indirectly from the operations of the company and of the companies it controls”. The Loi de

Vigilance thus takes into account “environmental damage” resulting from business operations.

There have been debates around the globe about the need for binding laws relating to due

diligence. For example, in Germany there are currently discussions about creating a binding law

on a national level.

5.4 The German Due Diligence Act (Sorgfaltspflichtengesetz)

Due to the poor outcomes of the NAP surveys, the Federal Minister of Labor and Social Affairs,

Hubertus Heil, and the Federal Development Minister, Gerd Müller, have both argued for a binding

law (Spiegel 2020d), which they refer to as the Due Diligence Act or ‘Sorgfaltspflichtengesetz’ in

German (Federal Ministry of Labour and Social Affairs and Federal Ministry for Economic

Cooperation and Development). Heil stated that “since voluntary measures are not sufficient as

seen in our survey, we need a national law to ensure fair competition” (Spiegel 2020a). Müller

supports Heil’s view and has stated that “to ensure human rights standards in supply chains that

prohibit child labour and make sure that the minimum requirements for social and environmental

standards are being met, we need a legally binding framework” (ibid). The Minister of the

Environment, Nature Conservation and Nuclear Safety, Svenja Schulze, also expressed her

support for the Due Diligence Act and argued that voluntary regulations do not work (Spiegel

2020b). However, there is not a consensus in the Federal Government when it comes to the



14

binding Due Diligence Act. For example, the Federal Minister for Economic Affairs and Energy,

Peter Altmaier opposes it due to liability regulations (Spiegel 2020d).

Professor of economic policy at the University of Freiburg and Director of the Walter Eucken

Institute, Lars Feld, fears that the law could damage Germany’s economy. He asserts that the

previously successful German economy, which has strong international value chains and

production abroad, could be jeopardized (ibid). He therefore “looks at the supply chain law with

great horror" and asks “how companies are supposed to ensure that the human rights obligations

in supply chains are respected in the individual countries?” (ibid). Feld believes that this is a

political task and subject to the sovereignty of states (ibid). However, it can be argued that state

responsibility still plays a part in the UNGPs. Parallel to businesses carrying out due diligence in

their supply chains, it would be preferable for Germany to support the local governments in the

supply chain to create (and control) more human rights regulations and environmental

standards.

The managing director of the German Trade Association, Stefan Genth, has argued that "a

national supply chain law would put textile retailers in Germany at a massive disadvantage in

international competition” and states that companies should not act as a “as substitute police”

for compliance with the law (Spiegel 2020c). The general manager of the General Association of

the German Textile and Fashion Industry, Uwe Mazura, also criticized the proposal for a binding

law and states that the government is planning an “anti-competitive law against small and

medium sized businesses”, which burdens the German company without addressing the real

issues. However, unlike the proposals for the European binding law, the Due Diligence Act is

meant to apply to large companies with over 500 employees and not small and medium sized

enterprises (Spiegel 2020d).

On the other hand, associations representing consumers generally side with politicians who

advocate for a binding law. The Federation of German Consumer Organizations states that “as a

consumer, I must be able to rely on the fact that my purchase is not promoting human rights

violations or environmental damage" (Spiegel 2020a). Krause states that “the economy has tried

to convince us that responsibility for a sustainable world lies in the consumer's behavior” (Spiegel

2020c). She states that this is wrong and asserts that “anyone who demands sustainable

consumption must start with production. In the future, there will be legally binding framework

conditions for this" (ibid).

Environmental groups argue that environmental standards for companies’ supply chains are

not only feasible but also legally justified (Spiegel 2020b). In particular, the Bund für Umwelt und

Naturschutz Deutschland (BUND), Greenpeace und the Deutsche Umwelthilfe argue for

enshrining the Due Diligence Act in German law (ibid). Executive Director at Greenpeace e.V.,

Martin Kaiser, states that “the economy even undercuts the minimum standards it has set itself.

In the future it must be clear that anyone who disregards environmental protection and human

rights will be held accountable” (ibid). Environmental groups argue that the Due Diligence Act is

important, despite efforts being made on the regional level by the European Commission to

implement an EU law. Antje von Broock, the managing director of the BUND, argues that this is

because it is easier to get a majority vote in the EU when individual states have already

implemented laws (ibid). Overall, it can be argued that a binding law would broadly promote



15

sustainability and will lead to more sustainable products and services in the long run according

to Kathrin Krause, a consultant at the Nachhaltiger Konsum Bundesverband (Spiegel 2020c).

In the current version of the Draft Key Points of the Due Diligence Act, which were created by

the Bundesministerium für Arbeit und Soziales (BMAS) and the Bundesministerium für

wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) and leaked to the public this year, it is

proposed that due diligence under German law would also extend to environmental protection

as long as its is related to human rights (BMAS und BMZ 2020). However, environmental due

diligence requirements are not expressly mentioned on their own (ibid). It is therefore unclear to

what extent the law will affect aspects of environmental protection, such as climate change.

As can be seen by the severe impacts of climate change already occurring today and the grave

predictions to come, mitigating climate change is an important issue and necessary for securing

human rights globally. Some may argue that it is difficult to measure companies’ contributions

to climate change, however, the case of Luciano Lliuya v RWE AG has shown that this task (albeit

complex) is indeed possible. In this case, the German company RWE is being sued by a Peruvian

farmer for environmental damage based on calculations indicating RWE’s contributions to total

greenhouse gas emissions (Harvard Law & International Development Society). Extending the

German Due Diligence Act to expressly require environmental due diligence (in particular in

regards to greenhouse gas emissions) is thus not only a necessary, but also a feasible, step in

fighting the climate crisis.

5.5 Should a Binding Law be Implemented on the International, Regional, or

National Level?

On an international, regional as well as national level, another question that arises is whether a

binding law should be passed. On the international level, the UN Draft Treaty on Business and

Human Rights has been proposed. Associate Professor of Law at Wageningen University Bernaz

states that she was “surprised to find out that the core of the Draft includes neither direct

corporate human rights obligations, nor corporate criminal responsibility under international

law” and only includes “international obligations of states, and states only” (Bernaz 2020). The

EU, however, has voiced another concern, which is “that the international treaty initiative may

undermine the consensus built around the UNGPs and distract resources from their further

implementation” (Augenstein et al. 2018, p.22). However, since the issue is international and

many developed countries are engaging in practices, which are resulting in human rights

violations and environmental damage in supply chains, it can be argued that an international,

binding law would most likely be most effective in fulfilling climate change commitments.

Despite carrying out negotiations for their own EU law on this issue, the European Parliament is

“a staunch supporter of the binding treaty initiative” (Zamfir 2018, p.11). However, John Ruggie,

the developer of the UNGPs has stated that he envisages a “smart mix” of voluntary national and

international regulations and mandatory national and international regulations. Therefore, it

would make sense to develop a variety of regulations in this field to ensure protection of

environmental rights and human rights.



16

5.6 Should MNCs be Held Accountable for their Supply Chains under Binding

Law?

In the context of climate change commitments, another question arises as to what extent MNCs

can and should be held liable for environmental damage, such as pollution. The Atlas on

Environmental Impacts reports that “greenhouse gas emissions in the supply chains [...] are

about ten times higher than at their own locations in Germany” (Jungmichel et al 2017, p.11). It

also states that in sectors such as “clothing and food retailing, the supply chain accounts for

almost 100% of water consumption” and “a significant proportion is consumed in regions with

high water stress” (ibid). The environmental impact is not only limited to those sectors, but “in

all industries, the upstream value chain, from raw material extraction through the individual

processing stages to direct suppliers, plays a significant role in the environmental impact” (ibid).

The report therefore suggests that “environmental protection measures must [...] be initiated not

only at companies’ own sites, but also geared towards the supply chain” (ibid).

As mentioned in the previous section, MNCs are currently held responsible for human rights

violations under the non-binding UNGPs. Principle 13(b) states that business enterprises should

“seek to prevent or mitigate adverse human rights impacts that are directly linked to their

operations, products or services by their business relationships, even if they have not contributed

to those impacts”. In the commentary on this Principle, which is provided in the UNGPs, “business

relationships” refer to “relationships with business partners, entities in its value chain, and any

other non-State or State entity directly linked to its business operations, products or services”.

Thus 13(b) is referring to the responsibility of a business for its supply chain. Principle 18 requires

that “in order to gauge human rights risks, business enterprises should identify and assess any

actual or potential adverse human rights impacts with which they may be involved either through

their own activities or as a result of their business relationships”. According to the non-profit

organization Shift, when implementing the principle in the UNGPs, companies should consider

that “the responsibility to respect human rights extends throughout a company’s own operations

and all of its business relationships throughout its value chain” (Shift Project 2019). Thus, the

current regulatory framework addresses the responsibility of MNCs for their supply chains,

although this responsibility is non-binding.

According to the German Bundesvereinigung der Deutschen Arbeitgeber, corporate

responsibility in supply chain management is gaining more and more importance due to

globalization. However, a low standard of environmental and social protection, violations of

human rights, and corruption and ineffective governmental control make it difficult for MNCs to

regulate their supply chains in developing and emerging countries.

In the European Parliament report titled Towards a binding international treaty on business

and human rights, Zamfir states that “given the power of [MNCs] in today's globalized world, the

expectation that domestic law would be sufficient to impose human rights-related obligations

and to hold [MNCs] accountable for abuses is simply unrealistic” (p.5). He goes on to argue that

“the long supply chains make it extremely difficult to establish responsibility and hold

accountable those in the highest position of command in such chains” (ibid). Ultimately the

problem is that “states hosting powerful [MNCs] often lack the capacity to act against them or

do not take action over fear of losing foreign investment. Nor do [MNCs'] home states take action,



17

to avoid placing them at a competitive disadvantage” (ibid). Therefore, it is important to have a

binding Treaty on the international level as part of a “smart mix”, as this will help solve this issue

of competitive disadvantage.

6. Conclusion

In conclusion, the current implementation of the UNGPs is not working well, which is why

politicians, such as Heil, Müller and Schulze, argue for binding laws. Due to increased awareness

of a lack of human rights protection in supply chains, there are currently discussions taking place

on an international, European, and national level proposing to supplement current non-binding

regulations with binding laws. John Ruggie, who developed the UNGPs, has stated that he

envisages a “smart mix” consisting of a variety of national and international, binding, and non-

binding approaches.

Due to the interlinked nature of human rights and the environment (and climate), this essay

argues that the German Due Diligence Act should not only require human rights due diligence,

but also environmental due diligence. Despite the proposed EU law covering environmental

factors, passing legislation at the EU level is a lengthy process and might take a long time. Since

climate change mitigation is an urgent issue, which is negatively affecting the human rights of

individuals globally and harming the environment, it is imperative that companies are required to

conduct due diligence processes regarding their greenhouse gas emissions as soon as possible.

Therefore, the German Due Diligence Act should be extended to include environmental due

diligence and especially due diligence requirements related to greenhouse gas emission

reporting. This can help pave the way for EU-wide and international laws on environmental and

human rights due diligence that take greenhouse gas emissions into account.



18

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