The Independent View: A new vision for better business

Ahead of the 2019 General Election, the Liberal Democrats made a welcome commitment to ensuring “better business”. 

This vital policy promise, which sits squarely in the Party’s commitment to an ongoing pursuit of ‘radical reform’, recognises that the current system is not working to everyone’s benefit, and that firms should be have a positive impact on society alongside pursuing profit. The strongest of the policy pledges was for “a general duty of care for the environment and human rights”: a law requiring UK companies to assess and act on the risks that they pose to, and thus be better placed to prevent, deforestation, modern slavery and child labour.  

There’s never been a better time for the Liberal Democrats to maintain and build on this commitment. The UK is already moving in this direction, not least since the EU’s announcement that it will bring in such a law that will apply it to all companies operating in the bloc, regardless of where they are based.

Layla Moran MP has made the first move, pledging to meet a civil society demand “to support and call for a new law that will require UK companies to conduct due diligence on their human rights and environmental risks and holds companies accountable for failing to prevent abuses that do occur”. We call on Sir Ed Davey MP to match this pledge. 

A new law is sorely needed. The actions of some British companies are damaging communities and ecosystems around the world, shredding our national reputation for fair play. 

Last year, Traidcraft Exchange visited communities in rural Liberia who had been illegally pushed off their land by a British company, Equatorial Palm Oil. The promised compensation payments hadn’t materialised and protestors against the company had been intimidated and beaten with the support of Liberian authorities. Without the land that they had owned and farmed for generations, families were left without food or a reliable income, pushed further into poverty and insecurity.

In the past few years, the CORE Coalition has supported cases brought against three UK-based companies – Vedanta, Shell and Unilever – by communities in Zambia, Nigeria and Kenya, whose lives and livelihoods had been devastated by mining pollution, oil spills and violence. In all three cases, ‘parent’ companies in the UK profited from their overseas operations but failed to protect workers and communities from harm. Victims have had to jump through near impossible hoops to access justice, with the law overwhelmingly stacked in the companies’ favour.

Of course, the majority of British businesses don’t go around seeking to profit from exploitation of people and the planet. But when UK legislators turn a blind eye to the reality of those companies that do leave a trail of destruction in their wake, it makes life harder for those that try to do the right thing. 

The CORE Coalition, Traidcraft Exchange and more than 20 other organisations are calling for a law that would transform company behaviour. It would ensure that UK business leaders take responsibility for ensuring that human rights and environmental abuses don’t happen in their operations or supply chains – and it would hold firms legally accountable if they fail to do so. 

Such a law is hardly without precedence: in fact, it’s the firm direction of travel across Europe. France and the Netherlands have already passed laws along these lines, and similar legislation is under discussion in Germany, Switzerland and Finland.

In May 2020 the European Commission announced that a new law on corporate due diligence will be proposed in 2021. Liberal Democrat MEPs supported the call for legislation in 2019. And, crucially, this law will likely apply to all companies operating in the EU, including those headquartered in the UK. 

The next Lib Dem leader should ensure that the Party in the vanguard of working for better business in the UK. In doing so, they would ensure the Party is aligned to public opinion, which is heavily in favour of doing much more to tackle company bad behaviour  and which sees leaving the EU as an impetus for stronger, not weaker, protections for people and planet.

In the 21st century, companies need to respect human rights and protect the environment. A new corporate accountability law is a vital first step towards achieving this. 

The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.

* Tom Wills is Senior Policy Advisor at Traidcraft Exchange, an international development NGO with a focus on fair and sustainable trade. Louise Eldridge is Policy and Communications Officer at the CORE coalition, a UK civil society coalition working to ensure corporations are held accountable for human rights and environmental abuses.

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4 Comments

  • “In May 2020 the European Commission announced that a new law on corporate due diligence will be proposed in 2021. Liberal Democrat MEPs supported the call for legislation in 2019. And, crucially, this law will likely apply to all companies operating in the EU, including those headquartered in the UK. ”

    Why would a new EU law apply in the UK post Brexit?

    May well be a case for updating and consolidating existing laws to cover this but the downside with such all encompassing laws is that there will be a lot of spurious claims.

  • Duncan Brack 25th Aug '20 - 11:02pm

    To answer Frank West’s point, the due diligence law will apply to all companies operating in the EU, wherever they’re registered or headquartered, with respect to their operations in the EU. It wouldn’t apply to anything UK companies do solely in the UK. But of course, as Louise and Tom point out, the party already supports a similar law being introduced in the UK.

    The possibility of spurious claims is a real one, so the proof the companies need to provide when challenged, and the standards of due diligence systems the companies need to put in place, are important questions, which people are thinking about (I’ve just finished a study for the German government which touches on some of these issues). But the principle of due diligence legislation is a good one.

  • One of the biggest challenges to create ‘better’ business is to find an alternative to the gig economy.

  • Clive Sneddon 7th Sep '20 - 10:16pm

    I can see the point of due diligence legislation but wonder if it will be enough. How many UK companies will inspect conditions on the ground overseas? How many who try will be denied access by local government officials? I would like to see a broader requirement for companies to treat all stakeholders equitably, a companies stakeholders being its customers, suppliers, staff, shareholders and HMRC which has an interest in the company continuing to pay its taxes on its UK operations. This does not entirely get round the specific problems of due diligence legislation I just mentioned, but it would provide a broader framework in which to assess whether a company was doing enough to ensure its workers were not being exploited.

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