In the last few years, the EU has introduced a series of regulations that address the adverse impact of businesses on human rights and the environment. These include initiatives for corporate sustainability, due diligence, sustainable finance, as well as trade and import/export rules.
The measures encourage and support responsible business and financial engagement that respects human rights. Although these measures vary in scope and approach, each plays an important role in respecting human rights and the environment. The regulations related to business and human rights can be divided into the following main groups:
Companies
Initiatives focused on improving company practices for managing and reporting sustainability, not only within value chains but also in company operations. The two main directives here are the Corporate Sustainability Reporting Directive and the Corporate Due Diligence Directive both have a broader scope of impact, covering both the environment and human rights.
Financial Sector
The financing of the Green Deal and the EU Sustainable Finance Strategy has led financial institutions to take various measures to meet the needs of the green transition. While the focus is on creating “green” financing solutions, these measures include social elements or requirements for human rights compliance. Key regulations here include the Sustainable Finance Disclosure Regulation, the Taxonomy Regulation, the Social Taxonomy, and ESG rating regulations.
Trade and Import/Export
The business and human rights principles are embedded in the EU’s trade policy strategies, aiming to encourage good practices and restrict trade with prohibited goods. Key initiatives include the prohibition of forced labor, deforestation regulation, timber trade rules, and rules for the use of conflict minerals.
Green Transformation
The green transformation initiatives are based on rules that address environmental degradation while contributing to the transition to a carbon-neutral economy. The examples here are regulations on batteries and the rules ensuring secure and sustainable supplies of critical raw materials.
Digital Ecosystem
The EU has taken various steps to address key risks in the digital space. Different regulations aim not only to address risks to fundamental rights but also to set requirements for technology companies to mitigate these risks. Protecting fundamental rights in the digital space is accompanied by regulations such as the Digital Services Act, artificial intelligence regulation, product safety guarantees, and personal data protection rules.
Public Procurement
Regulations governing public procurement processes do not have a direct link to the UN Guiding Principles on Business and Human Rights or the OECD Guidelines for Multinational Enterprises. Human rights requirements are embedded in suppliers’ obligations to consider environmental, social, and labor standards in line with ILO conventions. In awarding public contracts, national authorities may require suppliers to respect human rights, and they may impose restrictions or exclude suppliers that might have been linked to human trafficking.
The above-listed initiatives include human rights protection, focusing on specific issues or risks to fundamental rights. Although not all include direct requirements for conducting due diligence, there is some link with the business and human rights legislation. However, these initiatives are at different stages of their development which may lead to inconsistencies or overlap in the legislative requirements. Therefore, more than ever, it is necessary to ensure policy coherence and provide clear guidelines for implementing the various regulations.
