On December 2, 2019, some of the world’s largest chocolate companies called the European Union (EU) to adopt a regulation placing a due diligence obligation on all companies importing cocoa or cocoa products on the European market.
Companies joining forces with NGOs
In a joint position shared with Fairtrade, Rainforest Alliance, and Voice, Barry Callebaut, Mars Wrigley and Mondelez International acknowledged the failure of soft law instruments, and notably the Harkin-Engel Protocol, to eradicate child labour in the industry’s supply chain. Such acknowledgment coming from companies is rare and quite surprising, especially keeping in mind in the case of the Harkin-Engel Protocol, that such voluntary mechanism was a substitute to a US mandatory legislation on a free-slave labelling system that chocolate companies and industry groups strongly opposed.
Endorsing arguments defended for years by NGOs that have advocated for regulation on business and human rights, companies explain that an EU legislation will create a level playing field among business actors, compelling them to all put the same weight on human rights and environmental challenges.
It is interesting to note in that regard that the current absence of a regional framework was, at the time of drafting process, an argument used by French companies lobbying against the national law imposing a due diligence obligation, arguing the law would impede their competitiveness.
Furthermore, signatories of the joint position added that in a time where an increasing number of European countries are moving towards regulation, a single regional legislation will provide predictability and consistency in contrast to several different national systems with their own requirements.
In fact, although currently only France and the Netherlands have adopted laws enshrining a due diligence obligation on business and human rights, the Dutch legislation only focusing on child labour, several national initiatives for mandatory human rights due diligence are being discussed. The most recent developments are coming from Norway where the Ethics Information Committee, appointed by the government in June 2018, delivered in November 2019 a draft act on supply chain transparency, the duty to know and due diligence.
Two calls and two different approaches aiming at the same goal
In the line of chocolate companies’ position, 42 German companies from various sectors, on December 9, 2019 also acknowledged that voluntary commitments alone are insufficient and called for a due diligence legislation. However, it is important to stress that contrary to the chocolate industry, German companies called for a law “in Germany that paves the way for ambitious regulation at the European level”. Hence, for German companies, national legislation is viewed as a first step before an EU regulation.
Will the EU live up to expectations?
While chocolate companies called on the EU to act, the same day, Finland’s Presidency of the Council of the EU organized the Business and Human Rights Conference and proposed an agenda for action. This agenda calls the European Commission, the European External Action Service and the Council of the EU to put in place a Joint Action Plan on Business and Human Rights based on the principles set out in the UN Guiding Principles on Business and Human Rights (UNGPs). The agenda covers topics on the development of legislation, State financing and public procurement, development cooperation, trade and collective initiatives involving the private sector, and access to justice for victims.
The agenda asserting that “action-oriented, time-bound commitments and activities should be an important part of the Plan” does not however contain any schedule.
While Finland’s Presidency ended at the end of December 2019, there is no certainty that the proposed agenda will be implemented. Since the adoption of the UNGPs, no real steps have been undertaken despite the 2011 commitment of the European Commission to implement them. Maybe the involvement of companies towards a regulation could be the game-changer desperately needed?
I wonder if the lethargy to act has to do with the fear of litigation for unfair trade practices by other nations. More specifically nations like the US who have taken the EU to WTO disupte settlement for “unfair practices.” The adoption of such EU regulation could be interpreted as protectionist, as the WTO ruled in the Airbus/Boeing case against the EU.
I don’t think this is the case here, as the requested regulation would not deal with any subsidies and would apply equally to every company that wants to import cocoa products on the EU market, irrespective of its nationality. Furthermore, due diligence is not unknown to EU regulation (e.g. Timber Regulation 995/2010 and Conflict Minerals Regulation 2017/821). I think there is a lack of political will (see for instance how reluctant the EU has been in the negotiating process of the UN treaty on corporate responsibility).