Cardinals call out ISDS as corporate ‘secret weapon’ and call for enforceable regulation of global corporations

July 13, 2020: In a blunt statement issued on July 6, 2020, Cardinal Jean-Claude Hollerich of Luxembourg, and Cardinal Charles Maung Bo of Yangon, Myanmar, added their names to a statement by 110 Catholic Bishops calling on governments to better regulate private corporations, and said the European Union must lead the way.

They referred to the scandalous tax evasion revelations of the Panama Papers, the Volkswagen pollution scandal and the super exploitation of workers by the fast fashion brands.

“And when their interests are at risk, multinational companies have a secret weapon they can use: the Investor-State Dispute Settlement (ISDS) mechanism, a private tribunal system through which they can bring to court any state, claiming back lost benefits because states passed social or environmental laws”, the cardinals said.

“This profit-driven system and the throwaway culture it brings needs to be challenged, now more than ever, in a time when the pandemic has upended our certainties and provided the opportunity to re-assess our world system and spark a just transition.

“Our societies can and must evolve towards greater respect for each other and our environment. But for that to happen, we need courageous decision makers to take action with the EU leading the way,” they said, adding “as cardinals, we can't just be bystanders”.

They applauded as an important step in the right direction the announcement by the EU commissioner for Justice, Didier Reynders, in April 2020 of mandatory and robust legislation on human rights due diligence.

This legislation should ensure that companies have the legal obligation to identify, assess, stop, prevent and mitigate the risks and violations to the environment and all human rights throughout their supply chains and to substantially improve the possibilities of affected people to claim for compensation in national civil courts.

The cardinals noted that the Global Compact of 2000 and the UN Guiding Principles on Business & Human Rights of 2011 are not legally-binding. “Since self-regulation has proven to be insufficient, we argue that new laws to regulate the private sector must be binding”.

They said that companies which continue to violate human rights even in the presence of a law should be legally accountable, and so the new law should include enhanced access to justice for victims, in order to comply with the state’s duty to protect them against corporate abuses.

Referring to the statement by Pope Francis, Evangelii Gaudium - 206, they called on all states to engage in the UN negotiations for a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations.

“Within the just transition we envision an economic system that serves people and the planet first, celebrating the interconnectedness of our human family and of our beautiful common home,” they concluded.