John McGeady, OLA Justice Officer – 14 December 2022

The Proposed EU Legislation: Corporate Sustainability Due Diligence Directive

Presently, draft legislation is before the European Union intended to hold corporations accountability for human rights abuses. The proposed EU Corporate Sustainability Due Diligence Directive will require corporations operating in the EU to conduct due diligence across their entire value chain. In other words, corporations will have a responsibility to check that none of the people with whom they do business, for example their suppliers, are engaged in human rights violations or environmental abuses.

Accountability in Value Chains

When we speak of value chains we mean every single business relationship or transaction involved in producing a good or service, from growing crops or mining the minerals, to processing, shipping, manufacturing, advertising and retail. The proposed law will require EU companies to ensure that at no point are the goods or service they produce, or the material or labour involved at any stage, contaminated by human rights abuses or destruction of the environment.

The legislative Process

The process of making law in the EU involves the three branches of the EU: the Commission, who propose legislation, and the European Parliament and the Council of Ministers, who negotiate the passage of legislation that is acceptable to all parties. The draft directive was proposed by the European Commission in February 2022. The Council of Ministers, representing the governments of the member states, reviewed the draft legislation. On 1 December 2022, the Council agreed on an amended text. The Council’s amended text now goes to the European Parliament, who will review it in 2023, and the process continues.

Weakened Legislation

Unfortunately, the Council’s amendments weakened the proposed Due Diligence Directive. The changes leave the inclusion of the financial sector at the discretion of each member state; this threatens a race to the bottom as no Government will want to disadvantage their domestic financial sector. Likewise, the change of language to “chains of activity,” rather than the more comprehensive “value chains,” limits the scope of application and further weakens the directive.

Opportunity for Advocacy

The European Parliament will now prepare to deliberate on the draft directive and amendments proposed by the Council of Ministers. This provides us, as EU citizens, with an opportunity to write to our MEPs and request that they advocate for robust legislation.

In particular, we need to ask that they focus on a number of ways to strengthen the law:

1. Make the inclusion of the financial sector mandatory, and restore the language of value chains rather than the more limited “chains of activity”;

2. Increase the scope of companies included: at present 99% of businesses will be excluded from the new EU rules;

3. Enable justice for victims: there are significant barriers to the ability of communities to take complex and expensive cases against EU companies;

4. And finally, to address dangerous loopholes: companies may be able to avoid court cases through signing contractual clauses with suppliers.

Advocacy is a dialogue, not a one-off action

If you have already written a letter on this issue you are encouraged to write another follow-up letter. The passage of legislation is a long process with many steps. There will undoubtedly be many changes to the original text before it is finally passed and made law. It is our duty to advocate for a final draft of the directive that actually does what it set out to do!

In this process it is important for our elected representatives to hear from us, the citizens, at each stage of the process to inform their decision-making. When the Council was negotiating its draft text it was important that our Government, especially the responsible minister, heard from us. Now, it is equally important that our MEPs hear from us. They are elected to represent our views, but if they don’t hear from their constituents they can’t be blamed for assuming this issue doesn’t matter to us.

If you have already written, then writing follow-up letters is important. The original draft legislation has already been amended by the Council, and will be amended again in future by the Parliament. It is important to let our MEPs know what we think of the amendments that have been made and what further changes we support. Advocacy in the legislative process is not a one-off action, it is a dialogue where we seek to inform legislation at each step of the process.

It is crucial that we draw attention to weaknesses in the legislation and call for the draft directive to be comprehensive and effective; to achieve what it set out to do. No legislation is perfect, but it is important that, as far as possible, it promote the Common Good and reflect genuine social justice, rather than merely serve the interests of profit.

To which MEP should I write?

You can write to the MEPs representing your constituency, or indeed all Irish MEPs, or for that matter MEPs in other jurisdictions. (We have attached the list of addresses for Irish MEPs.)

The Irish Coalition for Business and Human Rights have suggested that while we should certainly write to our own constituency representatives, we would do well to also write to Barry Andrews, Frances Fitzgerald, Deirdre Clune, and Seán Kelly. Both Barry Andrews and Frances Fitzgerald have supported strong legislation and it is important to encourage them to continue their efforts. Deirdre Clune and Seán Kelly also have important committee roles and so it important to let them know that this matters to Irish citizens. Barry Andrews and Seán Kelly both sit on the International Trade Committee, Frances Fitzgerald sits on the Committee on Women’s Rights and Gender Equality, and Deirde Clune sits on the Committee on the Internal Market and Consumer Protection and as a substitute on the subcommittee on Human Rights.