How Europe can improve the way global extractive companies do business

The draft Corporate Sustainability Due Diligence Directive is a key step towards minimising the negative impacts of businesses on the environment, as well as people, in global value chains. The law sets out rules for companies to comply with in order to do business on the EU market.

For decades, the extractive industry has escaped the regulator’s eye despite being linked to some of the world’s worst environmental and human rights disasters. From the Shell oil spill in Nigeria – which caused irreversible ecological damage – to Norilsk Nickel’s poor wastewater management (turning glacial rivers red), it is time this industry is asked to comply with strict human rights and environmental rules.

The European Commission’s proposed draft, however, falls short on a few key provisions. The text:

• Does not cover all companies in the extractive business, but instead sets a threshold based on revenue and/or number of employees. For the extractive sector, this would mean that around 20% of companies would not be covered by the rules.
• Does not adequately identify environmental risks, nor international environmental law for companies to follow. For instance, water pollution, biodiversity loss or waste management are all key environmental risks that are not defined in the draft law.
• Fails to require all companies to identify climate as an impact category and to require them to report on, with detailed information, their climate transition plans.

In this briefing, T&E analyses how the law can be improved by the European Parliament and member states.