A framework for corporate accountability

As a founding member of the European Coalition for Corporate Justice (ECCJ), Friends of the Earth Europe campaigns for a sustainable world in which corporations' drive for profit is balanced by the interests of society at large, and companies respect human, social and environmental rights.

Our proposal for a legal framework to hold multinational companies accountable is founded on the principles that legally enforceable mechanisms are necessary to reverse the unsustainable impacts of business activities. These mechanisms should be based on internationally agreed standards and principles in the areas of human, social and environmental rights.

Corporate social responsibility

Corporate social responsibility guidelines are increasingly being adopted by large multinational companies. However, they are voluntary, do not hold companies legally accountable, and have no sanction mechanisms. Pursuing this non-mandatory approach, and focusing only on the sharing of best practice and successful initiatives, fails to ensure compliance with internationally agreed standards, or the standardisation of codes of conduct.

A legal framework

Friends of the Earth Europe seeks to raise awareness about the human rights violations and environmental crimes that European companies have been responsible for worldwide. We campaign for a European legal framework to hold multinational companies accountable.

This framework should:

  • guarantee communities a legal right of redress for activities that adversely affect them, as well as rights to be consulted in advance;
  • guarantee people and communities rights over the resources they need to enjoy a healthy and sustainable life;
  • place a duty on directors of corporations to take account of social and environmental factors when taking business decisions;
  • and,require corporations to meet the best environmental, social, labour and human rights standards wherever they operate.

Corporate justice and accountability is based on the following 6 principles:

  • Internationally agreed standards and principles in the areas of human rights and social, labour, environmental and economic standards for corporate behaviour.
  • Regulatory measures to ensure that all corporations abide by national and internationally agreed standards, whichever provide the higher standard. It is insufficient that voluntary initiatives can be successful in some cases.
  • Stakeholders' rights are fundamental, and necessary for stakeholders to hold companies to account for their impacts, and for the duties of companies and their directors. A basic prerequisite for stakeholder rights is the existence of systematic internal and external dialogue processes. Stakeholders should be involved from the early stages of strategy and policy development.
  • Mechanisms for independent monitoring and verification of claims, as well as mechanisms for redress for those affected by corporate activities, are the only way that corporate accountability initiatives can be effective and credible.
  • High and consistent levels of transparency of business activities and products. This implies mandatory social and environmental reporting, disclosure of payments, subsidies and lobbying vis-a-vis public authorities, and consumers' and other stakeholders' right to know about the production process, products and services.
  • Changes in companies' core business activities, throughout their supply chain, to improve their business' impact. This requires responsible behaviour to be internalised throughout corporate governance, strategy, purchasing policies and business models in order to meet the standards set in existing agreements.

These principles are the underpinnings for our work, both as Friends of the Earth Europe and as part of the European Coalition for Corporate Justice, on economic and corporate issues.