The New EU Rules on Non-Financial Reporting: Potential Impacts on Access to Remedy?

Abstract

This article addresses an important but not directly visible development arising from a new EU Directive introducing mandatory human rights reporting for certain large companies domiciled in the EU. The new Directive requires parent companies to report on human rights issues on a consolidated basis, which will oblige the parent to disclose inter alia the impacts of its subsidiaries, the group policy pursued on these issues and group-level due diligence measures undertaken to prevent, mitigate and remedy adverse impact. This article explores these new requirements’ potential to improve access to remedy for victims of human rights violations linked to a company’s overseas subsidiaries who sue the parent company in its EU home state for the parent’s part in the human rights violation. The focus is on cases brought by victims against parent companies under English law and on analysing the potential effects of these reforms on the obstacles to access to remedy in such cases created by the doctrine of corporate veil and the standard of duty of care. This article argues that by requiring parent companies to report on these matters, the Directive could be mandating companies to acquire knowledge of and involvement in the business of their subsidiaries and show this in their annual reports, which may result in them assuming a duty of care to employees (and others) affected by the actions of their subsidiaries.

Keywords: access to remedy, corporate reporting, corporate veil, duty of care, multinational corporations, non-financial reporting