The international recognition of environmental rights: companies’ obligations
Today's environmental and social challenges make it more necessary than ever to strengthen the environmental rule of law, as well as sustainability agreements and principles that regulate businesses. Resolution 48/13 of the UN Human Rights Council, followed by resolution 76/300 of the UN General Assembly, have been a step forward in this direction, consolidating the international community's interest in establishing effective environmental protection to guarantee healthy and sustainable living conditions on our planet, for which business is a critical actor. To go further, gathering information about the sustainability performance of companies is key to access investment, and therefore, for the development of their sustainability initiatives.
The evolution of environmental law has been rapid since its relatively recent (compared to other areas of law) emergence in the 1970s. Since then, environmental law’s progression accompanied the tragic events that human activity has caused on the environment and natural resources. This development generated a sort of piecemeal, incoherent and highly technical system, in which there has been no explicit and general recognition of a right to a healthy environment with mechanisms to guarantee its effective protection (Teresa Parejo & Nathan Lobel, 2018). The draft Global Pact for the Environment intended to remedy the lack of general recognition of that right. Traditionally, human rights fill in this void. Those human rights are undoubtedly recognized by the Universal Declaration of Human Rights and have a direct or indirect connection to the right to a healthy environment. Indeed, it is necessary to guarantee a safe, clean, healthy and sustainable environment to fully enjoy other essential human rights, such as the rights to life, to the highest attainable standard of physical and mental health, to an adequate standard of living, to adequate food, safe drinking water and sanitation, housing, participation in cultural life and development (UNHR, 2018). The enjoyment of some human rights, included in the Universal Declaration and in the International Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights, is fundamentally intertwined to the protection of the environment. Although the right to the environment is defended through closely linked human rights, due to its relevance, the right to a healthy environment shall be expressly recognised, so as to strengthen its protection. This recognition was ignited by the UN Resolution 48/13, which called on States around the world to work together and with other partners (including the private sector) to implement this newly recognised right.
1/ The right to a healthy environment and business
In the business field, sustainable development defines the balance between economic development, social welfare, and environmental protection. Today’s environmental and social challenges, clearly identified by the European Commission’s Green Deal, are raising the standards of corporate compliance in Europe. New norms and standards are currently being developed to make the EU’s climate, energy, transport, and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels, to achieve net zero emissions by 2050. As key players in the economy, companies must develop their activities not only by minimising their impact on the environment, but also by integrating the environmental and social aspects of their activities into their strategies. ESG factors have become essential to business performance, conditioning their financing opportunities and recognition by their customers and society in general. A sustainable development will only be possible through a bold transformation of our economic system (Mazzucato, 2021), by protecting people and the planet, and ensuring a just and sustainable ecological transition (UNHR, 2022). This transition ought to be done through public-private partnerships, in which companies are stakeholders.
The recognition of the right to a healthy environment will contribute to raising the level of environmental protection worldwide, not only in Europe, where standards are among the highest. Since environmental issues, and climate change in particular, do not stop at political borders, the goal of protecting life on our planet is only achievable if it is carried out globally. Ambitious protection within the EU is indispensable but, ensuring it at the global level would not only be more effective in developing public policies to reduce or eliminate the worst effects of climate change, pollution and biodiversity loss, but also in ensuring a level playing field for the economic development of business.
2/ The challenges for business
The uncertainty of our current socioeconomic context makes it very difficult for companies to design medium and long-term strategies. Humanity is facing major global threats that must be addressed by all stakeholders with a unique viewpoint. These challenges include economic, environmental and social items, but also technological, political and governance ones. The challenges are accounted for in the 2030 Agenda for Sustainable Development Goals. They all share the climate crisis as their common cause (or at least as an accelerator).
The United Nations Global Compact (UNGC) was adopted in 1999 as a voluntary corporate social responsibility initiative, considering the importance of the involvement of businesses to ensure the well-being of society (McKinsey, 2021). The UNGC was meant to promote a sustainable and responsible private sector through the advancement of ten principles, including respect for human rights, labor standards, environmental protection, and anti-corruption measures. Following the adoption of the 2030 Agenda, the Global Compact was mandated to advance the Sustainable Development Goals through the implementation of its principles with the support of the Compact’s local networks. These networks currently represent the largest voluntary corporate social responsibility initiative in the world.
Accelerating societal progress, in partnership with businesses, could start with the adoption of the UNGC’s Ten Principles, placing those principles at the heart of corporate action. This endorsement of principles would allow companies to contribute through their activities to achieving a fairer and more sustainable world. As the Global Compact states, “(w)hile the Ten Principles provide guidelines for avoiding negative impacts, the SDGs help companies to incorporate the vision of positive impact”.
In short, the ultimate goal is to ensure that companies adopt as their own the Ten Principles of the Global Compact and the 17 SDGs of the 2030 Agenda. Both the Principles and the SDGs are cross-cutting frameworks in terms of their themes, referring to environmental, social and governance sustainability.
2.1/ Regulation defining a sustainable economic model in Europe:
A number of European regulations have recently been adopted or are in the process of being adopted to accelerate the green transition of business and help ensure a fairer and more inclusive society. The following regulations stand out, being in line with Resolution 48/13:
- European Climate Law:
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021, establishing the framework for achieving climate neutrality (‘European Climate Law’), with an intermediate target of 55% cut-down in emissions by 2030, compared to 1990’s levels, through the Fit for 55 legislative package.
- Environmental and social taxonomy:
The European Union’s environmental taxonomy (green taxonomy), approved by Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on establishing a framework to facilitate sustainable investment, seeks to direct private investment towards the activities necessary to achieve climate neutrality.
Similarly, the social taxonomy, currently in the pipeline, is the classification of economic activities that contribute significantly to the EU’s social objectives. The taxonomy establishes a common code for investors, companies and regulators on what is socially sustainable and what is not.
- Sustainable Finance Disclosure Regulation (SFDR):
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosures in the financial services sector introduces disclosure obligations on how institutional investors and asset managers should integrate ESG factors into their risk management processes.
- Corporate Sustainability Reporting Directive (CSRD):
The Non-Financial Reporting Directive is still in the pipeline, and is set to replace Directive 2014/95. It would require companies to disclose information about how they operate and manage social and environmental challenges. This initiative would help investors, civil society organizations, consumers, and other stakeholders understand the approach of big corporations.
- Corporate Sustainability Due Diligence Directive (CSDD):
The proposal for a Due Diligence Directive aims to require of companies to identify and, where appropriate, prevent, address or mitigate human rights’ violations and environmental impacts derived from their activities.
2.2/ Improving Business impact measurement
Companies have an increased interest in sustainability in both management and financing, driven by regulation and growing interest from stakeholders.
This interest has led to the emergence of various tools for measuring company performance through the analysis of ESG factors: guides for managing ESG factors, such as the Science Based Targets impact (SBTi), the Task Force on Climate-related Financial Disclosures (TFCD) or the UN Global Compact itself; standards for reporting non-financial information, such as the Global Reporting Initiative (GRI), or the Sustainability Accounting Standards Board (SASB); management measurement tools, such as the B Impact Assessment (B Corp), SDG impact standards of the United Nations UNDP, and the Impact Management Platform (IMP); rating agencies such as Sustainalytics, or the Carbon Disclosure Project (CDP), or stock market indexes, such as the Dow Jones Sustainability Index (DJSI), as well as organisations and benchmarks by sector of activity.
Resolution 76/300 of the UN General Assembly is a huge step forward as it reinforces the importance of the environmental rule of law and its link to sustainable development. Efforts from governments, civil organisations, companies, investors, and society as a whole are vital. Collaboration between actors and alliances are, hence, key to success, and such collaboration is easily built thanks to a globally recognised right.
Europe has developed legal instruments and assessment tools on the environmental and social performance of the business sector, aiming to achieve a green transition of the economic system by 2050. Challenges posed by that change to companies include the difficulty to keep up with the necessary pace established by science and the international regulation, the lack of clarity in the measurement mechanisms, and, above all, the immense cost incurred by the green transition.