Brussels, 24 February 2022 – The Commission has finally issued its long awaited proposed directive on Corporate Sustainability Due Diligence after the EU Regulatory Scrutiny Board struck down twice previous proposals.
The text, made public yesterday, can become a turning point in the fight to make businesses accountable for their impact on the environment and human rights only if significantly improved during the upcoming legislative process. Self-evidently, intense lobbying activity by industry groups has jeopardized the text, which appears full of shortcomings and exemptions.
EFFAT regrets to see that there is no reference to trade unions engagement along the due diligence process. What is more, when workers’ consultation would apply, it is merely considered as a possibility (“where applicable”). Commenting on the draft proposal, Kristjan Bragason, EFFAT General Secretary said: ‘The mandatory involvement of trade unions in the elaboration, implementation, enforcement and assessment of due diligence plans is essential to make due diligence a truly participatory and transparent process while ensuring companies deliver on their due diligence obligations’.
Another worrying element is the limited personal scope of the initiative which would only apply to companies with more than 500 employees and a net worldwide turnover of more than EUR 150 million. The initiative would also cover smaller companies with more than 250 employees and a net worldwide turnover of more than EUR 40 million operating in high risks sectors. Such definition includes agriculture and food production. Although the inclusion of these two sectors is welcomed, the scope of the initiative would still exclude a huge proportion of companies operating in the EFFAT sectors.
Within its scope, the initiative includes third country based companies operating within the territory of the Union and meeting certain criteria. However, to ensure an effective level playing field with EU based companies, it will be necessary to extend the scope to those third-country based companies operating within the EU through different business structures such as subsidiaries, franchises and other business relationship.
Sue Longley, IUF General Secretary said: ‘IUF affiliates around the globe have great expectations with respect to this EU directive. It must be clear that it is no longer possible for EU based companies operating around the globe to ride roughshod over trade union and human rights or to damage local communities with impunity’.
Key improvements are needed in several other parts of the directive including on the effectiveness of the remedies put in place to prevent and to end the actual or potential adverse impacts, as well as on the need to facilitate access to justice for victims and third parties (including trade unions) clarifying that the burden of proof is on companies.
EFFAT will work closely with the European Parliament and the Council to ensure our crucial trade union demands will be reflected in the final text.
Proposal for a Directive on Corporate Sustainability Due Diligence [ LINK ]