For Ukraine’s sake, pass the EU due diligence directive
EU companies will be actively involved in rebuilding Ukraine, in fact, they have already started as the war continues. This month, EU co-legislators agreed to dedicate and additional €50bn via the new EU Ukraine Facility to support the war-torn country’s "recovery, reconstruction and modernization".
Regarding a national reconstruction plan, the Swedish government has already said, "the Swedish business community has much to contribute to Ukraine’s reconstruction and development".
It is essential that EU companies set to gain recovery contracts operate responsibly. The risks to vulnerable people through the disregard of human rights are high, as are risks to the environment. This is now a matter for EU member states when they vote on the Corporate Sustainability Due Diligence Directive (CSDDD). The well-being of Ukrainians and the quality and sustainability of the Ukrainian national recovery are at stake.
Businesses operating in a war-afflicted society give hope for normality, even a better future. However, businesses should remember that people affected by war are vulnerable. Farmers are desperate to return to work, even if much of their land is heavily mined (25,000km2 of agricultural land is potentially strewn with mines and other dangerous debris from the conflict).
Tradesmen and labourers are ready and eager to work, even without official labour contracts, as data of informal employment shows.
Vulnerable people like women with young children, the elderly, persons with disabilities and displaced persons, are prone to be exploited by fraudulent recruiters. We are reminded that during war the risk of forced labour increases significantly.
Furthermore, because of damaged infrastructure and reduced state capacity for oversight, hazardous operations such as (toxic) waste transport and disposal can become significantly more hazardous.
The CSDDD means protective human rights and environmental standards. It mandates due diligence to avoid forced labour and ensure the payment of living wage alongside core occupational health and safety as well as environmental protection measures. These can be enforced against EU companies in their home countries via EU state authorities and courts, thereby ensuring responsible business conduct for those in Ukraine.
The CSDDD is not simply about exporting EU business standards abroad, but rather a world-leading initiative to put internationally agreed standards of corporate behaviour from the UN and OECD into law; to oblige companies to undertake corporate human rights and environmental due diligence, wherever they operate.
The need for responsible business conduct to underpin Ukraine’s recovery and reconstruction was highlighted by the Ukrainian ministry of economy of Ukraine at an international conference (Recovery of Ukraine based on responsible business conduct: values and Standards), held in Kyiv last December.
Months before, Ukrainian civil society and academics also issued a statement to the same effect. The Environment Compact for Ukraine, the result of the work by the high-level working group co-chaired by Margot Walström and Andriy Yermak and presented to president Volodomyr Zelensky on 9 Feb 9 also recommends putting corporate human rights and environmental due diligence into law.
Recently, the Confederation of Ukrainian Employers has also expressed support for the EU’s CSDDD.
The war in Ukraine has clearly demonstrated that human lives can be totally dependent on companies’ behaviour during conflict. When individuals are saved thanks to an employer-organised evacuation, or a family is sustained by retailers continuing to sell food and medicine amid disrupted supply chains, then this is thanks to a responsible company undertaking’s heightened due diligence.
Together with the UN Working Group on Business and Human Rights, the UNDP has developed clear guidance for businesses on how to undertake heightened human rights due diligence during conflicts (in addition to a Ukraine-specific study), in order to ensure that they don’t exacerbate the conflict.
Whilst the EU Commission’s 2022 proposal did not include provisions incorporating "conflict due diligence", they were added, after the Russian invasion, by the European Parliament and Council into what is now the final directive text.
The CSDDD will help guarantee a more orderly, just and safer reconstruction of Ukraine by the EU private sector. It will also ensure EU companies operating in Ukraine do everything they reasonably can to help the lives of Ukrainians return to normal, whilst rebuilding the country with dignity.