2021

SEPTEMBER

A NEW GUIDELINE ON SUSTAINABLE TEXTILE PROCUREMENT WAS PUBLISHED BY THE GERMAN GOVERNMENT

The German government published a “Guide for Sustainable Textile Procurement by Federal Administration” (in German), an effort to achieve the objective set out on their sustainability action plan to have 50% of the public textile procurement made in accordance to sustainable criteria. The guidelines cover the whole production process of textiles and the entire supply chain. Although the guide is directed towards four major federal procuring agencies, it also provides guidance for federal states and municipalities.

A BAN ON PRODUCTS MADE WITH FORCED LABOUR WAS PROPOSED BY THE EUROPEAN COMMISSION

The President of the European Commission, Ursula von der Leyen, announced that the EU will propose a ban on products issued from forced labour. In her statement, she affirmed that “Doing business around the world is good, global trade around the world is good and necessary, but this can never, ever be done at the expense of people’s freedom and dignity”.

THE COMMISSION’S CLASSIFICATION OF WHICH ECONOMIC ACTIVITIES CONTRIBUTE TO CLIMATE CHANGE MITIGATION WAS ACCEPTED BY THE EUROPEAN PARLIAMENT

The European Union Taxonomy Regulation adopts a strategy towards sustainable finance in which the main objective is to re-direct the financing flow to environment-friendly activities. In September 2021 the Members of the European Parliament embraced the classification proposed by the Commission that detailed the economic activities suited to minimize climate change. The Delegated Act is intended to work as “screening criteria” to analyse which economic activities are contributing to the mitigation of climate change or not causing harm to the set environment objectives.

THE FRENCH COURT OF CASSATION REVERSED A LOWER COURT’S DECISION AND AFFIRMED THAT LAFARGE COULD BE INDICTED FOR CRIMES AGAINST HUMANITY

In 2016 eleven former Syrian employees, together with ECCHR (European Center for Constitutional and Human Rights) and Sherpa (a French NGO) filed criminal proceedings against Lafarge (a French cement company). The company is accused of having purchased commodities and made payments to the Islamic State (IS) and other armed groups in order to keep its Syrian cement factory up and running between 2012 and 2014. It is claimed that these arrangements, which value has been esteemed to amount to 13 million euros, provided funding to IS amounting to complicity in crimes against humanity. In 2019, the Paris Court of Appeals had dismissed the charges brought against Lafarge for complicity in crimes against humanity. In September 2021, the French Supreme Court reversed this decision and affirmed that Lafarge could be indicted for crimes against humanity.

AUGUST

THE THIRD REVISED DRAFT OF THE UN BUSINESS AND HUMAN RIGHTS TREATY WAS PUBLISHED

In 2014, the UN Human Rights Council adopted a resolution drafted by Ecuador and South America establishing an open-ended intergovernmental working group with a mandate to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporation and other business enterprises. Since then, several versions of the instruments have been released and various sessions of negotiations have taken place. The last version (the third revised draft) of the draft treaty was released on the 17th of august 2021.

THE IPCC RELEASED ITS SIXTH ASSESSMENT REPORT ON CLIMATE CHANGE

On the 9th of August  2021, the Intergovernmental Panel on Climate Change (IPCC) released its report – Climate Change 2021: The Physical Science Basis. Its key findings include the following:

-The 1.5°C rise in global temperature is likely to be reached before 2040.

-Climate change is intensifying the water cycle, affecting rainfall patterns, and melting glaciers, ice sheets and snow covers.

-We will observe the continued rising of the sea level, throughout the 21st century.

-The occurrence of extreme weather events is expected to increase in the coming years.

-Preventing the 1.5°C rise is still possible but would require immediate and large-scale reductions in greenhouse gas emissions of 50% by 2030 and by 100% by 2050.

This report first deliverable of the Sixth Assessment Report, which will be completed in 2022.

JULY

THE FRENCH PARLIAMENT ADOPTED THE CLIMATE AND RESILIENCE BILL

On the 20th of July, the French Parliament adopted a wide-ranging climate bill that will impact enterprises, transports, food industries and other stakeholders. Some of the measures include:

-Phasing out the advertising for fossil fuel energy.

-Banning, from 2025, the single-use food packaging made from polystyrene.

-Banning domestic flights, that are not connecting international flights, in case of journeys that can be made by train in less that two and a half hours.

-Creation of a mandatory “environmental label” for goods and service, that aims to inform consumers about the environmental footprint of their purchases.

-Creation of the crime of ecocide.

The French government announced that this legislation will help to cut greenhouse gas emissions by 40% by 2030 (when compared to 1990 levels).

THE EUROPEAN COMMISSION ADOPTED DECISIVE STEPS TOWARDS A MORE SUSTAINABLE ECONOMY

The European Commission (EC) adopted, on the 6th of July, important measures with impact on sustainable finance. Firstly, the EC adopted a Renewed Sustainable Finance Strategy, which is a package of measures targeted to improve the flow of money towards financing and supporting a transition to a sustainable economy in the EU. The strategy complements other European Green Deal initiatives and identifies four main areas/strategies. Secondly, it adopted a legislative proposal for a European green bond sta ndard (EUGBS), which is a voluntary standard for the green bond market. The proposed Regulation will set a standard for companies and public authorities on how they can use green bonds to finance investments while meeting sustainability requirements. Thirdly, it adopted a Delegated Act supplementing Article 8 of the Regulation (EU) 2020/852 (Taxonomy Regulation). The Delegated Act determines the content, methodology and the way the disclosed information must be presented by the financial and non-financial enterprises, regarding the share part of environmentally sustainable economic activities in their business, investments, or lending activities. The Act will be subject to scrutiny by the European Parliament and the Council for a period of four months (that can be extended by two more months) and if no objections are raised it will be published and enter into force 20 days after.

JUNE

GERMANY ADOPTS THE SUPPLY CHAIN DUE DILIGENCE ACT

On the 11th of June 2021, the German parliament adopted the Supply Chain Due Diligence Act which requires large German companies to exercise due diligence in relation to a defined list of human rights and certain environmental standards in their own operations and the activities of ‘direct’ suppliers. With respect to “indirect” suppliers, a due diligence obligation exists only to the extent that the company obtains ‘substantiated knowledge’ of a possible violation or is otherwise prompted by other circumstances. In terms of enforcement, the law provides that the German Federal Office for Economic Affairs and Export Control is responsible for enforcing the law. Public authorities can investigate cases of non-compliance and issue fines.

NORWEGIAN PARLIAMENT ADOPTED THE TRANSPARENCY ACT

On 10 June 2021, Norway adopted the Act on business transparency and work with fundamental human rights and decent work (‘Transparency Act’) which is set to enter into force in January 2022 (2). The law creates a corporate duty for large and medium-sized companies domiciled in Norway as well as foreign companies selling products and services in Norway, to conduct due diligence in relation to human rights and decent work throughout all their supply chain, and to provide or cooperate to ensure remedy. The law also requires companies to report on their due diligence exercise and grants a ‘right to information’ to any interested stakeholder the right to request information from companies in this respect. As for the enforcement, the law provides that the Norwegian consumer authority shall be responsible for monitoring compliance with the law and providing guidance to the company, and may issue injunctions and impose fines in case of non-compliance.

(2) Act on business transparency and work with fundamental human rights and decent work (also known as the ‘Transparency Law’), Proposition 150 L (2020-2021), available (in Norwegian) at: https://www.regjeringen.no/contentassets/c33c3faf340441faa7388331a735f9d9/no/pdfs/prp202020210150000dddpdfs.pdf

U.S. SUPREME COURT DECIDES IN FAVOUR OF NESTLÉ AND CARGILL IN CHILD SLAVERY CASE

The lawsuit had been filed under the Alien Tort Statute (ATS) – an 18th century statute which provides US federal courts jurisdiction to hear claims against non-US defendants – by six Malian nationals against Cargill Inc and Nestle SA over claims that they were trafficked as child slaves to Ivory Coast and forced to work on cocoa farms. On the 17th of June 2021, the Supreme Court reversed the decision from the Court of Appeals for the 9th Circuit – which had allowed the claim to proceed – and rejected the claim on the grounds that nearly all conduct had taken place outside of the US and that there was no basis for such extraterritorial application of the ATS.

EUROPEAN CLIMATE LAW WAS APPROVED

On the 24th of June 2021, the European Council approved the European Climate Law, which aimed to write into law the goal set out in the European Green Deal to achieve climate-neutrality by 2050. The Climate Law requires EU Institutions and Member States to take the necessary measures to meet the zero greenhouse gas emissions target by 2050, and includes measures to keep track of progress and adjust actions as well as a review of progress every 5 years.

MAY

SPAIN APPROVED A CLIMATE LAW

On the 15th of May 2021, Spain’s Parliament approved a Climate Law that intends to set out climate targets and goals for the future of Spain. It establishes ambitious commitments like:

– The reduction of 23% of Spain’s emission, by 2030, compared with the levels of 1990;
– A goal to generate 74% of the country’s electricity with renewables by 2030;
– The end of fossil fuels’ production on Spain by the 31th of December 2042;
– A prohibition of the technique of hydraulic fracturing (fracking) and also radioactive mining, such as uranium;
– A prohibition for new exploration and production of coal, gas and oil; and a prohibition to sell vehicles that use fossil fuel, by 2040.

U.S. DISTRICT COURT JUDGED IN FAVOUR OF 7 EX-IPI WORKERS

In the US, Chief Judge Ramona V. Manglona decided in favour of 7 Chinese construction workers from the casino-resort project of Imperial Pacific International (IPI), in Saipan, and awarded them $5.91 million over allegations of force labour and human trafficking by IPI’s former contractors and subcontractors.

THE DISTRICT COURT OF THE HAGUE RULED SHELL MUST CUT ITS CO2 EMISSIONS

On the 26th of May 2021, the District Court of the Hague ordered Royal Dutch Shell (RDS) to reduce its CO2 emissions by 45% relative to 2019 levels, in its global operations (including customers and suppliers) by the end of 2030. The case had been filed in 2019 by the Friends of the Earth Netherlands (Milieudefensie), over 17,000 co-plaintiffs and six other NGOs. The Court considered that the CO2 emissions represent a threat to human rights, especially the right to life and the right to respect for family life. The court found that RDS, as the parent company which sets out the corporate policy for the Shell group, has a legal obligation which derives from an ‘unwritten standard of care’ under Dutch tort law to ‘contribute to the prevention of dangerous climate change through the corporate policy it determines for the Shell group’. The court made an explicit reference to soft law instruments that had been endorsed by RDS, such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises a ‘universally endorsed’ and ‘authoritative’ soft law instruments suitable as guidelines in the interpretation of the unwritten standard of care, regardless of whether or not RDS had committed to the UNGPs.

APRIL

LEGISLATIVE PROPOSAL FOR A DIRECTIVE ON SUSTAINABILITY DISCLOSURES FOR COMPANIES

On the 21st of April 2021, the European Commission presented a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) , aiming to amend four existing pieces of legislation: the EU Non-Financial Reporting Directive (NFRD), the Audit Directive and the Audit Regulation as well as the Transparency Directive. The proposal introduces significant changes to the NFRD, which include, inter alia:

– The extension of the scope of reporting companies: whilst the NFRD was applicable to large ‘public interest entities’ (i.e., listed companies, banks and insurance companies) with more than 500 employees, the proposal seeks to extend the scope to include all large (1) as well as all listed companies, with the exception of listed micro-enterprises;

– The introduction of a general EU-wide audit requirement for the sustainability reports;

– The inclusion of new sustainability reporting requirements; and,

– The obligation for the companies to digitally tag the reported sustainability information.

(1) Defined as companies that have, on their balance sheet date, more than 250 employees on average during the financial year, and a balance sheet total in excess of €20m or a net turnover in excess of €40m.

PROVISIONAL AGREEMENT ON THE EUROPEAN CLIMATE LAW

The European Parliament and the European Council presented a provisional agreement for the European Climate Law. This Regulation is part of the European Green Deal and represents a deep commitment to reach, by 2050, climate neutrality. It foresees, inter alia:

– A climate target for 2030: a reduction of at least 55% in the net emissions of green-houses gas, when compared to 1990;
– A commitment to prepare, with the different sectors of the economy, sector-specific plans to pursue climate neutrality;
– Provisions directed to the adaptation to climate change; and
– Coherent and efficient policies in the European Union that have climate neutrality as an objective.

MARCH

AN ENGLISH COURT RULED THAT A SHIPPING COMPANY CAN BE SUED OVER A SHIPBREAKER’S DEATH IN BANGLADESH

The case had been filed in the UK against UK shipping company, Maran, who had acted as an agent to sell a defunct vessel to a ‘demolition buyer’ who, in turn, had conveyed it to a ship breaking yard in Bangladesh to perform the demolition of the vessel in spite of the international concern regarding the dangerous working practices in the Bangladesh shipbreaking yards which have been raised over the past few years. In the process of the demolition of the vessel, the worker fell to his death and his widow brought proceedings against Maran in the English courts in negligence and unjust enrichment for damages. On the 10th of March 2021, an English Court of Appeal held that Maran could be found to incur a duty of care to the shipbreaking worker on the basis that the company knowingly exposed him to significant dangers.

THE EUROPEAN PARLIAMENT ADOPTED A RESOLUTION ON CORPORATE DUE DILIGENCE AND ACCOUNTABILITY

On the 10th of March 2021, the European Parliament approved a resolution with recommendations to the Commission on corporate due diligence and corporate accountability which includes a draft directive. The draft directive provides that Member States shall lay down rules to ensure that companies carry out due diligence with respect to potential or actual adverse impacts on human rights, the environment and good governance in their operations and throughout their value chain. in terms of scope, it would cover EU-domiciled large companies, publicly listed small and medium-sized companies and SMEs operating in high-risk sectors as well as non-EU domiciled companies selling goods or providing services in the internal market. The draft directive provides for a public enforcement mechanism through a national competent authority responsible for the supervision of the application of the directive, as well as for a civil liability mechanism for harms caused or contributed to by acts or omissions of a company subject to the directive or another entity under its control.

NEW BILL ON RESPONSIBLE AND SUSTAINABLE INTERNATIONAL BUSINESS BEING CONSIDERED IN THE NETHERLANDS

In March 2021, four Dutch political parties submitted a draft law on responsible and sustainable international business to the Dutch Parliament. The draft law imposes a duty of care on all the companies registered in the Netherlands or selling goods or providing services to the Dutch market to prevent adverse human rights and environmental impacts arising out for their activities and value chains. It also imposes on large companies human rights and environmental due diligence obligations. In terms of enforcement, it provides for a public regulator which can issue binding instructions and financial sanctions in case of non-compliance.

FEBRUARY

UK SUPREME COURT CLAIMS THAT NIGERIAN FARMERS CAN BRING CLAIMS AGAINST SHELL IN ENGLISH COURTS

On the 12th of February 2021, the UK Supreme Court held that the proceedings filed in the UK by approximately 42,500 Nigerian residents against parent company Royal Dutch Shell and its Nigerian subsidiary, SPDC, could proceed in English courts. The court reaffirmed, following the Vedanta decision, that a parent company may incur a duty of care in respect of the activities of a subsidiary in determined situations.

UK SUPREME COURT RULED THAT UBER DRIVERS ARE WORKERS

On the 19th of February 2021, the UK Supreme Court unanimously held that Uber drivers are to be classified as ‘workers’ and not self-employed under employment law, meaning that they will now be entitled to associated worker rights such as minimum wage and holiday pay.

JANUARY

VEDANTA RESOURCES SETTLED THE CLAIMS BROUGHT IN THE ENGLISH COURTS BY ZAMBIAN VILLAGERS OVER ALLEGED COPPER MINE POLLUTION

In this case, over 1,800 Zambian villagers had brought a claim against the UK parent company, Vedanta, and its Zambian subsidiary, KCM, on the basis of the alleged pollution from discharges of effluent from the Nchanga Copper mine in Zambia owned and operated by KCM. In April 2019, the UK Supreme Court had allowed the claims to proceed and affirmed that a parent company may incur a duty of care in respect of the activities of a subsidiary in determined situations.

A DUTCH COURT ORDERED SHELL NIGERIA TO COMPENSATE NIGERIAN FARMERS

In this case, separate proceedings had been filed by 4 Nigerian farmers in the Netherlands against parent company Royal Dutch Shell (RDS) and its Nnigerian subsidiary, SPDC, on the grounds of the environmental damage allegedly caused by oil leaks from pipelines and associated infrastructures operated by SPDC. On the 29th of January 2021, the Court of Appeal of the Hague delivered three judgments finding SPDC strictly liable for the oil spills in the villages of Oruma and Goi (nigeria). The court stated that Shell could not prove, beyond any reasonable doubt, that the leakages resulted from sabotage. The court also found that RDS owed a duty of care to the communities in the vicinity of the pipeline to ensure that a leak detection system was installed and ordered the company to ensure the Oruma pipeline was equipped with one.