…and how a European due diligence standard could have helped provide an immediate response
Cover Photo: Diego Pérez/SPDA
Note: The Repsol Case is just one of many examples of corporate abuse in vulnerable or local communities. A Directive on corporate sustainability due diligence could change this situation and empower communities to seek justice and redress. Learn more about this rule and how to influence political decision-makers at justice-business.org.
Last January, around 12,000 barrels of oil were spilled off the coast of Ventanilla in Peru, causing one of the worst ecological disasters in the history of Lima’s sea. The leak occurred when the Italian ship Mare Doricum was unloading crude oil into the underwater pipes of the La Pampilla refinery, operated by the Spanish company Repsol.
The socio-environmental consequences of the spill are irreparable: more than 11,000 hectares of marine coastal area were affected. The presence of petroleum hydrocarbons was found in 66 areas, of which 46 are beaches, and 20 are cliffs. In addition, the spill impacted two protected areas of great importance. The lives of around 10,000 people, who depended directly on the sea for their livelihoods, have drastically changed.
“A lot of oil has ended up buried under the beaches or on the seabed. So, there has been a whole range of social and economic impacts. But there is also the question of how long the impact will affect the local communities’ livelihoods for, how long they will have to suspend their activities for,” says Miguel Lévano Muñoz, from Oxfam Peru, and Coordinator of the Oil Working Group of the National Human Rights Coordination, which also monitors cases of oil spills in the coastal areas and in the Peruvian Amazon. In the last 25 years, more than a thousand spills have been identified.
Alejandro Chirinos, Executive Director of CooperAcción, warns about an even more vulnerable group: “A particular case is the impact on the lives of women who depended on work in the coastal marine zone, who in turn also work in the home. Some of them -many, actually- lost their husbands to COVID, because in Peru, as in other places, the virus had a higher mortality among men”.
Repsol’s slow reaction to contain the spill and the Peruvian government’s lack of resoluteness in applying sanctions and taking measures were harshly criticized by citizens and activists around the world, unleashing a wave of protests in Peru and, on a smaller scale, in Spain. The spill uncovered a series of irregularities in Repsol’s contingency plan, a basic and fundamental requirement for a company working in the oil sector, and brought into the public eye the multiple fines accumulated over the years by the company over the years.
“Cases like this show a violation of their obligations by the companies responsible for the operation and by public entities in terms of verification, supervision and compliance,” said Lévano.
How can a company with such a reputation be allowed to operate in a country? Furthermore, why, despite international outrage, did the Peruvian government take so long to condemn this environmental disaster?
The “shared responsibility”
As Peru grappled with the impacts of the spill, new legislation was raising to prominence in political discussions in the European Union. In February, the European Commission tabled a proposal for a Corporate Sustainability Due Diligence (CSDD) directive, which would introduce rules for EU companies to respect human rights and the environment throughout their value chains worldwide. The law could change the rules of the game for cases such as Repsol’s, if only it did not contain glaring loopholes.
One of them is the definition of environmental impacts and the list of such impacts in the draft law, which leaves out oil spills on water, amongst other recurrent types of environmental damage. In other words, both companies, the Spanish Repsol and the Italian Mare Doricum, could go unpunished, even if the law were in effect.
“Due diligence is not a privilege, it is rather an obligation that companies must implement to anticipate risks, so that when they are foreseen, they respond in a fair and responsible manner. This spill revealed weaknesses in our institutional framework to determine the environmental responsibility of offenders and showed serious deficiencies at the legal level to ensure that there is an immediate and efficient response”, highlighted Carol Mora, Director of Environmental Policy and Governance of the Peruvian Society of Environmental Law – SPDA.
The disaster occurred in the midst of political instability in the country, a recurring situation in Latin America. The Peruvian environmental justice system is weak and inexperienced. Peru is responsible for ensuring that investments are carried out respecting the best environmental standards, while the European Union should also be responsible for ensuring said standards.
“We are talking about a double fault, both of the Repsol company itself, not even having the mechanisms to be able to immediately intervene and remedy the damage at sea, and above all the poor response of the State in a matter like this. Moreover, when it came to sanctioning the Repsol company, the State also acted late” said Henry Cordova, National Coordinator of the Citizen Movement against Climate Change, MOCCIC, who also recounts that “at first, the State itself showed signs of weakness when it asked citizens to go themselves to take care of the impacts [of the spill] on the shore area, when we all knew that this was a responsibility that the company should have assumed directly.”
As per the European Commission CSDD Directive, the current text does not ensure the reversal of the burden of proof for victims, meaning that if the communities affected by the spill chose to sue the companies, they would have to gather and produce the evidence proving that the damage was the result of a failure on the part of the company to take sufficient measures to prevent the spill. Accessing the necessary evidence can be difficult for communities facing a powerful multinational corporation like Repsol.
“As it happens in most cases of oil spill, knowing how companies act in the face of spills, we know that the first hurdle is always having accurate information. Beyond what the company reported, what we were looking for was to have information produced above all by official sources, but also the alerts launched by residents. We knew that the magnitude of the damage was much greater than what the company claimed at the beginning and it seems to us essential to strengthen the information available on this issue,” said Córdova.
The future of the planet’s resources
The EC Directive will still have space for debate in the rest of the year but it will fail to trigger transformative and significant changes if major shortcomings of the text are not addressed.
“It is baffling that a law that is supposed to address the negative impacts of companies on the people and the planet risks not applying to such an egregious case, the impacts of which will be felt by communities for years and might damage the environment irreparably” according to Giuseppe Cioffo, Corporate Regulation officer at CIDSE, the coalition of international Catholic NGOs. “The Commission has defined the list of environmental impacts in a way that will leave major cases of environmental harm uncovered. In fact, if the text is not significantly improved, only few impacts will be covered by the legislation and companies will not have to check, and will not be accountable for, major damage to the planet and its eco-systems.”
The draft bill is now in the hands of the European Parliament and Council of the EU, which in the next month will battle over the content of the law, and the range of human rights violations and environmental damage that it will cover. NGOs and civil society in Europe and abroad remain hopeful that the co-legislators will substantially improve the text, but according to Cioffo “while some companies are open to improving their practices, business lobbies are furiously opposing this proposal and any improvements to the draft.”