The European Parliament Draft Directive on Corporate Due Diligence and Accountability: Stakeholder-Oriented Governance on Steroids

Human rights violations, the unsustainable exploitation of planet Earth and corrupt governments are three of the thorniest challenges humanity is facing today. In an ever more economically and socially interconnected world, countries with a stronger record on such issues are naturally tempted to use their direct and indirect influence to obtain change elsewhere. One tool for exercising indirect influence is by enlisting economic players as the private enforcers of “virtuous” countries' standards in jurisdictions where the standards do not apply or are consistently ignored. The goals are noble and important, but can this tool achieve much in terms of improving those jurisdictions' record on human rights, environmental protection and corruption? That is the question raised by current EU initiatives aiming to better protect human rights and the environment and improve public governance across the world by enhancing stakeholder-oriented corporate governance. As argued below, there are serious reasons to doubt that proposals focusing, ultimately, on companies' internal risk management processes can achieve much.