Future law for due diligence on the environment and human rights takes first steps
ESG Spain Alert
The legislation, currently under a public consultation period, will set out an infringements and penalties system for companies that fail to fulfill their duties to respect, protect and promote human and environmental rights and will ensure access to justice so that potential victims can claim an effective remedy, among other measures.
The Social Rights and 2030 Agenda Ministry has started a prior consultation period for the draft bill on protection of human rights, on sustainability and on due diligence in transnational business activities.
Companies are increasingly including in their strategies voluntary mechanisms for identifying, preventing and mitigating risks related to human rights and environmental impact. Those mechanisms are not binding, however, and have their limitations. There are also many other companies, transnational corporations in particular, which have no mechanisms of this kind and their activities create effects on human rights.
As a result, in line with the steps taken by our neighboring countries, it has been proposed to enact a law with the following objectives:
- Set out on a binding and general basis the obligation for Spanish transnational corporations or groups, or for transnational corporations operating on the Spanish market, to respect human and environmental rights in all the activities carried on through their global value chains, including implementation of due diligence measures throughout the chain, among which are the adoption and creation of due diligence plans contributing to preventing, eliminating, mitigating and remedying abuses of this kind. The participation of labor unions and not-for-profit organizations will be ensured in the creation, implementation and supervision of measures of this kind.
- Bring legal certainty to economic relationships between states and avoid any unfair competition practices which may have an adverse effect on Spanish companies applying rigorous standards of respect for human and environmental rights.
- Set out an infringements and penalties system for any companies which fail to comply with their obligations to respect, protect and promote human and environmental rights and those relating to the due diligence mechanisms mentioned above, a system that will ensure access to justice for anyone affected by those practices to seek compliance with those obligations.
- Ensure access to justice to claim an effective remedy for any person or community that has been a victim of abuses of human and environmental rights arising from the activities carried on by corporations of the kind mentioned above in their entire supply chains. It will have to be ensured that labor unions and not-for-profit organizations can bring collective action on behalf of victims.
- Ensure everyone’s right to be informed by the corporations mentioned above of the risks that their activities carry for human rights and the environment and of the steps geared towards eliminating those risks under the due diligence plans and their implementation.
- Appoint an independent and public authority responsible for overseeing compliance with the law, and ensure that its activities cannot under any circumstances interfere with access to justice to demand adequate compliance with the obligations laid down in the law.
- Ensure implementation of the 2030 Agenda and of the Sustainable Development Goals, along with achievement of the targets approved in the Sustainable Development Strategy for 2030.
The public consultation period, which will be open until March 3, 2022, comes almost a year after the European Parliament resolution of 10 March 2021 with recommendations to the Commission on corporate due diligence and corporate accountability, and we are eager to know the details of the European Commission’s work in this respect.
This law is included in the Government’s Annual Legislation Plan for 2022, as discussed in this commentary.