As the European Union undertakes a more robust legislative approach requiring a more human rights-focused and environmentally conscious framework in its legislative initiatives, such an approach has the potential to transform the EU legal system. Human rights and environmental due diligence processes could shift from voluntary audits, certification, and the area of so-called soft law to one of legal accountability for non-compliance with international and national laws. Much of what is happening in the European Union, which is one of the largest consumer markets in the world, will dictate how raw materials will be sourced, processed, and traded globally.
From February 27–March 2, 2023, a delegation of Indigenous leaders met with European Union Parliamentarians in Brussels, Belgium, to bring attention to the impacts of extractive industries on Indigenous Peoples’ rights, lands, and environments globally. The meetings were co-organized by Transport & Environment, CATAPA, European Environmental Bureau, and Cultural Survival to discuss the EU’s proposed Corporate Sustainability Due Diligence Directive (CSDDD). As historically marginalized Peoples, it was important for us to engage and deliver urgent messages to parliamentarians and commissioners about how supply and value chains leading to the EU market directly impact Indigenous communities.
The CSDDD is of great significance to Indigenous Peoples around the world for two reasons. First, we are in the moment of the so-called green energy transition, which seeks mineral resources that are essential for smartphones, electric cars, and solar energy. This implies a new and more aggressive frontier of mineral extraction for metals such as lithium, copper, nickel, and cobalt; a World Bank Group report finds that the production of these minerals could increase by nearly 500 percent by 2050.
The second reason is that the vast majority of these resources are on Indigenous lands, which presents an existential threat to the lives and well being of Indigenous Peoples. Indigenous territories contain significant concentrations of untapped heavy metal reserves around the world. Data shows that in the United States, 97 percent of nickel, 89 percent of copper, 79 percent of lithium, and 68 percent of cobalt reserves and resources are located within 35 miles of Native American reservations. Globally, a recent study published in Nature Sustainability in 2022 found that 54 percent of mining projects extracting minerals needed for the green energy transition overlapped with Indigenous lands. The proposed CSDDD presents both opportunities and challenges for Indigenous Peoples.
The Corporate Sustainability Due Diligence Directive could substantially transform the legal global framework of human rights and international environmental laws if it includes the various frameworks pertinent to Indigenous Peoples’ rights, including the UN Declaration on the Rights of Indigenous Peoples, International Labor Organization Convention No.169, and the UN Declaration on Human Rights Defenders. It is deeply consequential for Indigenous Peoples because it aims to ensure that European companies neither cause nor contribute to human rights abuses and environmental damage in their operations, supply and value chains, and business relationships. If approved, it will require companies to identify, prevent, mitigate, and account for the adverse impacts of their activities on human rights and the environment, including those of Indigenous Peoples. The CSDDD aims to be a legal framework to protect Indigenous Peoples’ rights and interests by holding companies accountable for their actions overseas.
The CSDDD will provide Indigenous Peoples and civil society greater access to information and participation in decision-making processes related to corporate activities that affect their lives, territories, and environments at local and global levels. The impact that the extractive industry has on Indigenous Peoples specifically cannot be overstated. The Business and Human Rights Resources Centre reported in 2021 that 495 human rights allegations had been made against all 115 companies involved in transition mineral extraction over a period of 10 years. This legislation carries the potential to transform the industry’s power to promote more responsible and sustainable business practices that respect the rights and interests of Indigenous Peoples and contribute to their well being and self-determination.
There are eight primary reasons why the Corporate Sustainability Due Diligence Directive might fail—and compromise the just transition to a green energy economy in the process.
1. As drafted, the CSDDD fails to adequately recognize and address the right to Free, Prior and Informed Consent (FPIC). The absence of any reference to FPIC could lead to Indigenous Peoples being excluded from decision-making processes about activities that affect their lives and territories. Without explicitly referencing Indigenous Peoples’ rights frameworks such as ILO Convention No. 169, the UN Declaration on the Rights of Indigenous Peoples, and the UN Declaration on Human Rights Defenders, the CSDDD may not contain strong enough enforcement mechanisms to ensure that companies are held accountable for their actions.
2. The CSDDD only provides for civil liability, which may not be enough to stop companies from engaging in harmful activities or to compensate Indigenous Peoples for loss and damage.
3. There is a substantial inconsistency between the proposed CSDDD and the Corporate Sustainability Reporting Directive, a European directive that requires companies to report on the impact of their activities on the environment and society.
4. As drafted, the legislation will only apply to about one percent of European companies (companies with 500+ employees and an annual profit of EUR 150 million or more). Its limited scope excludes smaller-scale projects and leaves several stages of the supply chain unaddressed.
5. Such limited scope will not adequately address the issue of land and resource rights—one of the most important issues for Indigenous Peoples and critical for the survival of vulnerable communities. Most violations of Indigenous Peoples’ rights are perpetrated by small and medium-sized businesses at the beginning of the supply chains where land grabbing, violence, forced displacement, and environmental harm occur.
6. The CSDDD fails to address the systemic injustices, both current and historical, that Indigenous Peoples have faced because of European colonialism and extractivism.
7. Litigation is an intricate, expensive, and prohibitive process for Indigenous communities. The CSDDD fails to provide any guidance on the mechanisms for corporate liability or the redress for this crucial aspect of justice.
8. Article 15 of the CSDDD conspicuously excludes references to greenhouse gas emissions and their environmental impacts. It fails to recognize the connection between environmental degradation and climate change as viewed through the lens of both Indigenous knowledge and scientific inquiry. The proposal requires companies to adopt a plan to ensure that their business model and strategy are compatible with a sustainable economy and the limiting of global warming to 1.5°C. The proposed provision is ambiguous and incoherent and gives companies total freedom to define the scope of loss and damage finance mechanisms. For these reasons, the European Company Law Experts Group argues that Article 15 should be taken out of the CSDDD.
The version of the CSDDD drafted in March contained language ensuring the respect of Indigenous Peoples’ right to lands, territories, and resources that they have traditionally owned, occupied, or otherwise used or acquired (Annex, Part I, Point 20). However, as the draft moved to the European Council, Point 20 was deleted, along with a reference to the UN Declaration on the Rights of Indigenous Peoples from Subheading 2 of the Annex.
The European Council followed a similar process in regard to deforestation-free products and battery regulation by deleting direct references to the UN Declaration on the Rights of Indigenous Peoples, creating a major gap in the protection of the rights of Indigenous Peoples. The European Commission, Parliament, and Council say that they are committed to closing this gap. However, as we have witnessed, references to main frameworks that ensure the rights of Indigenous Peoples are disappearing without notice right before the adoption of these important pieces of legislation. Legal uncertainties, loopholes, and ambiguities threaten implementation.
All three branches of the EU legislative system have the unique opportunity to ensure that the rights of Indigenous Peoples are respected, protected, and fulfilled. After the approval of the provision during upcoming negotiations among the European Commission, Parliament, and Council, EU Member States must establish rules for effective due diligence to avoid adverse impacts on human rights, the environment, and Indigenous Peoples’ rights. The inclusion of references to Indigenous Peoples, the UN Declaration on the Rights of Indigenous Peoples, ILO Convention 169, and most importantly, the right to Free, Prior and Informed Consent in the text and annexes of the CSDDD is essential.