The EU must implement ambitious climate due diligence and hold companies legally accountable for their climate impacts.

Although some EU businesses are actively contributing to climate mitigation, most European companies remain big contributors to climate change through the continuation of deforestation, mining, pollution and destruction of crucial ecosystems, and are not liable for the ecological breakdown and human rights violations in their global value chains.

Only 16% of EU corporations have set emission reduction targets in line with the Paris agreement’s 1.5C goal[1], and most reduction commitments are still decades away. Many companies that do have greenhouse gas reduction targets, exclude emissions in their global supply chains[2] and systematically rely on external offsets (carbon credits)[3], which makes substantial corporate climate accounting impossible[4]. A recent UN report therefore recommends that to avoid greenwashing, “non-state actors need to move from voluntary initiatives to regulated requirements for net zero”[5].

Companies are increasingly being challenged in court[6] for their lack of climate action as it is clear that existing voluntary intentions to curb emissions and mitigate global warming are insufficient.

We call on the EU to integrate real and ambitious climate due diligence in the Corporate Sustainability Due Diligence Directive[7] (CSDDD). Climate due diligence would oblige companies to identify, assess, mitigate and prevent climate risks in their global value chains and include legally binding obligations to make credible transition plans with enforceable targets for the reduction of greenhouse gas emissions. The proposed directive only has weak expectations for companies to draw up a transition plan and does not currently include any obligation like climate due diligence, allowing companies to continue business as usual[8].

We don’t have time to wait for voluntary corporate initiatives. A new HLEG report highlights that reduction commitments need to urgently include expectations on non-state actors to prioritise thorough reductions of emissions in their value chains.

Therefore, climate due diligence can be a significant tool for the EU to align with the Paris Agreement.

Climate due diligence would also contribute to better and more sustainable investment decisions as investors would be able to effectively evaluate asset value of the potential investment and identify climate-related risks in order to mitigate them, so their assets increase in material value and long-term viability[9].

70% of companies that participated in the European commission’s study on due diligence and public consultation expressed a strong need for a harmonised EU legal framework on due diligence for human rights and environmental impacts[10].

Therefore, we call on the EU to implement climate due diligence in the CSDDD and include the following:

  1. Companies must develop and implement a plan to align with the Paris agreement that includes short- and medium-term reduction targets, covers all scope 1,2 and 3 emissions and does not rely on carbon credits or other offsets.
  2. Companies must be obliged to identify and assess risks of harmful climate impacts on human rights and the environment, both through strengthening the resilience of impacted communities and ecosystems, and take appropriate measures to prevent those impacts.
  3. The EU must monitor companies’ plans for identifying how they will decarbonize their business and sanction those that fail to meet their obligations.
  4. The public and people affected by corporate climate or human rights impacts must be able to take companies to court for greenwashing and failure to deliver on their emission reduction targets.

Signatories:

  • Antoine Bailleux, Professor of Law at the University Saint-Louis, Brussels.
  • Arié Alimi, Lawyer.
  • Birgit Mahnkopf, Professor emeritus at the Berlin Institute of Political Economy and the Berlin School of Economics and Law
  • Christel Cournil, Professor of Law, Science Po Toulouse
  • Christophe Bonneuil, Historian, Director of Research at the CNRS
  • Claire Burlin, Lawyer.
  • Clément Capdebos, Lawyer.
  • Doug Kysar, Professor of Human Rights, Yale University.
  • Emmanuel Daoud, Lawyer.
  • Gaël Giraud, Economist, Director of Research at the CNRS, Honorary President of the Institute
  • Rousseau and Director of the Environmental Justice Program at Georgetown University.
  • Hugues Dumont, Professor of Law at the Université Saint-Louis, Brussels.
  • Janez Potočnik, former European Commissioner for the Environment
  • Jean-Pascal Van Ypersele, Climatologist, Professor of Environmental Sciences at the Catholic University of Leuven and former Vice-President of the IPCC.
  • Joanna Setzer, Director of the Climate and Environment Program at the LSE Grantham Institute.
  • Johann Zaller, Deputy Director of the Institute of Zoology at the University of Natural Resources and Life Sciences, Vienna.
  • Julia Steinberger, Professor of Societal Challenges of Climate Change at the University of Lausanne.
  • Laurence Tubiana, Director of the European Climate Foundation, Ambassador for
  • Climate Negotiations at COP21
  • Markus Wissen, Professeur à la Berlin School of Economics and Law
  • Olivier de Schutter, former UN Special Rapporteur on Human Rights.
  • Paul de Grauwe, Economist attached to the London School of Economics
  • Reinhard Steurer, Associate Professor at the Institute for Forest, Environment and Natural Resource Policy, BOKU, Vienna
  • Riccardo Mastini, Doctor in Ecological Economics at the Autonomous University of Barcelona.
  • Sandrine Dixon-Decleve, Co-President of the Club of Rome
  • Sybille Bauriedl, Professor of Integrated Geography at the European University of Flensburg.
  • Thom Wetzer, Associate Professor of Law and Finance, Oxford University.
  • Timothée Parrique, Author, Doctor in Ecological Economics.
  • Tyler Giannini, Professor of Law at Harvard School of Law.
  • Ulrich Brand, Director of the Department of Political Science at the University of Vienna.
  • Valérie Masson-Delmotte, Paleoclimatologist, Director of Research at the CEA and Co-Chair of IPCC Group 1.

 

 

[1] https://www.energymonitor.ai/policy/net-zero-policy/85-rise-in-european-companies-with-science-based-climate-targets

[2] https://www.climateimpact.com/news-insights/news/climate-impact-partners-releases-fourth-annual-report-climate-commitments-fortune-global-500/

[3] Carbon offset credits, that meet high standards of environmental and social integrity, can support beyond value chain mitigation efforts and provide crucial financial assistance for transitioning developing country economies to low-carbon sources of energy. Though, they should not be considered as the emissions reductions required for the net-zero emissions strategy.

[4] https://www.clientearth.org/latest/latest-updates/stories/the-legal-risk-of-advertising-carbon-offsets/

[5] https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf

[6] https://www.ciel.org/rise-in-forward-looking-corporate-climate-cases/

[7] https://ec.europa.eu/info/publications/proposal-directive-corporate-sustainable-due-diligence-and-annex_en

[8] https://www.clientearth.org/media/qgcfpgvt/factsheet-environment-climate-csddd-june-2022-final.pdf

[9] https://manifestclimate.com/blog/climate-related-due-diligence/

[10] https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_1146