Towards Corporate Obligations for Freshwater?
The European Commissions Proposal for a Corporate Sustainability Due Diligence Directive and Freshwater Issues
By Candice Foot
Freshwater is essential for all life on this planet. Despite this fundamental life sustaining role, the anthropogenic pressures exerted on freshwater resources have increased exponentially, some of the most substantial of which are caused by companies. Companies exacerbate freshwater scarcity due to their volumes of freshwater extraction. Globally, approximately 84% of freshwater resources are withdrawn by the agricultural and industrial sectors. This mass extraction contributes to freshwater scarcity in the basins where companies operate, making freshwater unavailable to meet basic human and environmental needs. Companies are also a major source of freshwater pollution, caused by their discharging harmful agricultural effluents and industrial wastewater contaminated with chemical and radiological substances into surrounding freshwater sources. This deteriorates freshwater quality, causes serious health problems for people and destroys ecosystems.
In response to companies’ adverse impacts on human rights and the environment, regulatory and governance instruments that aim to prevent and mitigate these have been developed. These include prominent international frameworks like the 2011 United Nations Guiding Principles on Business and Human Rights, and the 2011 OECD Guidelines for Multinational Enterprises, which have introduced a core concept for companies: human rights and environmental due diligence. Due Diligence is an ongoing process that companies should implement to identify, prevent, mitigate and account for how they address potential and actual human rights and environmental impacts in their own operations, their global value chains, and other business relationships. These instruments have culminated in the most recent rendition, the European Commission’s 2022 Proposal for a Corporate Sustainability Due Diligence Directive, which introduces several obligations for companies, the primary of which is a due diligence obligation.
Drawing from this important context and the need for companies’ adverse impacts on freshwater resources to be mitigated, it is crucial to explore how the draft Directive deals with companies’ adverse impacts on freshwater by looking at the material scope of the due diligence obligation.
The material scope of the due diligence obligation is contained within a two-Part Annex, and is defined by a limited catalogue of human rights norms and environmental standards that originate from specifically selected international instruments.
Part I of the Annex pertains to human rights included in international human rights instruments and covers human rights in two ways. First, it explicitly lists a limited number of human rights norms. Second, it includes a “catch all” phrase which refers to a list of human rights instruments. One of the human rights explicitly listed is the prohibition of causing any measurable environmental degradation that denies a person access to “safe and clean water.” While this would seem to encompass the human right to water, the Annex formulates this right in a novel way that is a limited construction of the international human right to water’s normative content. The international human right to water’s normative content encompasses three elements: quantity, quality, and accessibility. Quantity requires freshwater supply to be sufficient and continuous for personal and domestic uses, like drinking, cooking and personal and domestic hygiene. Quality entails that it should be clean and free from harmful substances. Accessibility necessitates four elements: physical, economic and informational accessibility, as well as non-discrimination.
The draft Directive’s human right to water appears to be narrower than the international right. It encompasses the normative content of the right relating to accessibility by use of the word “access”, as well as to quality by the words “safe and clean.” However, there is not explicit reference to quantity, other that potentially “drinking.” If “drinking” is indicative of the quantity of freshwater the right encompasses, then this is a narrow conceptualisation compared to the international right which includes multiple uses in addition to drinking, like cooking, cleaning and hygiene.
The right can potentially be included in its full normative content via the “catch all” phrase. The instruments listed there include the International Covenant on Economic, Social and Cultural Rights, which is the instrument that the international right to water was derived from. It also includes other instruments that include the human right to water for specifically protected groups like women, children and persons with disabilities. As the draft Directive envisions broadening the scope of human rights, it is plausible that the narrowly defined explicit human right to water could be expanded to include a broader right. However, it remains unclear if the broader right will be covered by the draft Directive.
Part II pertains to the environmental standards, and lists a few standards included in several international environmental conventions or multilateral environmental agreements (MEAs). The material scope of the selected MEAs is wide but arbitrary and ranges from the protection of biological diversity to protecting the environment against certain chemical pollutants. This is an exhaustive list, and is limited to those standards contained within the Annex’s 12 articles.
The draft Directive’s reliance on MEAs renders it reliant on the fragmental patchwork of MEAs in international environmental law, and results in it missing the issues that the regime has not regulated. Additionally, even though there are over 250 MEAs currently in force, the draft Directive only utilises seven of those which are available.
While freshwater is not explicitly mentioned in the environmental standard, some of the MEAs can encompass freshwater. For example, the environmental standards in some of the MEAs list chemicals that are known to pollute freshwater. This is evident in the Minamata Convention on Mercury, that encompasses the chemical mercury, and the Stockholm Convention on Persistent Organic Pollutants, that encompasses the chemical diedrin, both of which are known to pollute freshwater. While it appears positive that some freshwater pollution is encompassed by the MEAs, due diligence obligations are limited only to those chemicals contained within the MEAs. Pollution caused by chemicals or substances not contained therein fall outside the material scope of the draft Directive. Considering that the number of chemicals in the world is estimated to exceed 350, 000, this is a very limited material scope.
Freshwater depletion is not explicitly contained within any of the MEAs, and the only possible way it may be implicitly encompassed is with reference to the Convention on Biological Diversity. The website of the convention makes it clear that freshwater itself is not biodiversity, but biodiversity is the life associated with freshwater, and thus the two cannot be separated. From this construction it may be possible that freshwater depletion can be encompassed within biological resources, however this interpretation is not guaranteed, and it remains to be determined if this implicit interpretation will be adopted.
While the draft Directive certainly entails some positive steps in implementing legal obligations for companies to include freshwater issues in their due diligence processes, it is insufficient to cover all the adverse impacts that companies have on freshwater from both a human rights and environmental perspective.
Moving forward, the draft Directive should be amended to more comprehensively account for how companies adversely impact freshwater. This could be done by amending the listing approach to encompass freshwater issues more comprehensively. From the human rights perspective the human right to water can be amended to align with the full normative scope as it exists in international instruments. From the environmental perspective a wider range of MEAs can be included that cover freshwater, however, if this approach is adopted the environmental material scope will always be limited to those specific environmental issues that are regulated by MEAs. Alternatively, the listing approach can be abandoned. This approach aligns with international instruments like the UNGPs and OECD Guidelines that acknowledged companies can adversely impact virtually the full scope of human rights and environmental standards and should thus assess their adverse impacts on the complete spectrum of these rights and standards as contained in international instruments.
Such amendments are necessary if the draft Directive is to have any meaningful impact on how this life sustaining resource is used by companies.
Candice Foot is a PhD researcher at the Erasmus Graduate School of Law in Rotterdam, the Netherlands, where she works in the interdisciplinary research initiative “Public and private interests: A new balance.” Her research is centred on exploring corporate responsibilities to respect freshwater. She is also a member of the Human Rights Here Editorial Board, as well as a member of the Netherlands Network for Human Rights Research Working Group on Business and Human Rights.