Corporate Accountability

Today, eight years ago, the Peruvian mountain guide and small farmer Saúl Luciano Lliuya filed his civil lawsuit against RWE at the regional court in Essen in Germany. What began back then has now become one of the world's most recognised precedents for the question of whether individual major emitters must pay for protection against climate risks.

In this brief, BUND and Germanwatch examine cases of environmental degradation in value chains of European companies, for example impacts of land use, pesticides, or gas and oil operations. We also provide analyses of how proposals for the EU Corporate Sustainability Due Diligence Directive cover these impacts and highlight the pivotal role of the European Parliament in this matter.

Global consumption of raw materials at this point is not sustainable for the Earth. Germany consumes an above-average of resources compared to other countries. If they were to consume as much as Germany, it would take three Earths to satisfy global demand. We therefore welcome the German government’s initiative of a National Circular Economy Strategy to reduce raw materials demand, but press for adverse effects for the Global South to be addressed.

Lithium mining poses numerous environmental and human rights risks. As part of the Sector Dialogue Automotive Industry, Germanwatch therefore collaborated with stakeholders from industry and politics in the development of “cross-country recommendations for responsible lithium mining and recommended actions” in the “Lithium Project Group”. The paper identifies four risk areas and makes recommendations on how they can be addressed by the companies in the supply chain that mine and purchase lithium. Germanwatch supports the recommendations. However, we do see some key gaps in achieving a globally sustainable and equitable economy within planetary boundaries.

Design plays a crucial role in determining the circularity of a product, including factors such as repairability, recyclability, or the potential for refurbishment and remanufacturing. The Ecodesign for Sustainable Product Regulation (ESPR) establishes a new framework for setting ecodesign requirements for products and is therefore crucial to enable a circular economy. At present, the EU Commission, the Council and the European Parliament are negotiating the ESPR in the so-called trilogue. In this policy brief, we highlight five key issues that need to be considered to make the final version of the Regulation as effective as possible and to promote more durable and circular products.

Fatal accidents, environmental disasters, and serious human rights abuses have occurred repeatedly in the global value chains of many companies. It is therefore imperative to ensure that those affected have the means to seek redress, thereby mitigating the risks associated with human rights violations and environmental degradation. One potential avenue for remedy is through non-state-based operational grievance mechanisms, which can exist either at the corporate level or as independent entities. This policy brief examines the role of operational grievance mechanisms in the ongoing negotiations of the EU Corporate Sustainability Due Diligence Directive (CSDDD).

In our new policy brief, we analyse along with Climate & Company and Rechtsanwälte Günther why sustainability due diligence obligations for financial institutions are key to achieving the EU's climate goals. As an example for this tool, we draw on due diligence obligations for financial institutions to avoid financing projects that cause deforestation. In addition, the policy brief presents specific recommendations for regulating financial actors through the EU Corporate Sustainability Due Diligence Directive (CSDDD).

The legal report points to existing corporate CO2 reduction obligations that are currently not sufficiently taken into account by many companies. It concludes that the increasing density of corporate reporting obligations in the area of so-called ESG risks (Environment, Social, Governance) already results in implicit climate-related duties of conduct for companies, which require preventive and science-based decision-making, including at management level. The report was commissioned by the Dorothea-Laura-Janina Sick Environmental Foundation, Germanwatch, and Protect the Planet, and is based on an analysis of legal developments in the areas of corporate law, directors’ duties, sustainability due diligence duties, as well as tort law.

The Digital Product Passport (DPP) is comparable to a comprehensive digital index card or a “digital CV” that the EU seeks to introduce for a wide range of products. It is intended to provide information needed, for example, for more efficient repair and recycling of products. We believe that the DPP has a significant potential to pave the way towards a more circular economy as it can address the information deficit along a circular value chain that often impeded circularity.

The debate on downstream due diligence has never been more topical: The EU currently discusses the Corporate Sustainability Due Diligence Directive. However, both the Council and various parliamentary groups want to limit the scope of the value chain to which environmental and human rights due diligence obligations should apply. Among other things, the downstream value chain would then be (largely) exempted from corporate due diligence obligations. In this short policy brief, published along with Initiative Lieferkettengesetz, SOMO, SwedWatch, and the Heinrich-Böll-Stiftung we demonstrate why downstream due diligence is necessary and how it can be implemented. We also provide key recommendations for the Corporate Sustainability Due Diligence Directive.