Decisive political negotiations on the EU’s Corporate Sustainability Due Diligence Directive are set to commence, with EU co-legislators aiming to finalize a deal on the Corporate Sustainability and Due Diligence Directive. BusinessEurope Director General Markus J. Beyrer expressed concerns about the current state of affairs, stating, "We are still far from the workable and clear rules which EU businesses need to properly apply due diligence across their value chains, leaving companies between a rock and a hard place."
Beyrer highlighted the potential repercussions of the directive, emphasizing that companies may face the obligation to terminate contracts with partners deviating from UN principles, which could be detrimental to local communities in third countries. He suggested that establishing a list of reasonable exceptions would be a preferable solution.
Moreover, Beyrer raised issues regarding the ambiguity surrounding the level of detail required from European companies' suppliers, noting potential conflicts with existing legislation in certain third countries. He warned that companies conducting due diligence in such regions could face penalties and criminal liability, leading to potential market withdrawals and posing challenges to Europe's green transition and security concerns.
Concerns were also raised about the complexity of the legislative framework, with Beyrer stating, "As it stands now, the EU will end up with 27 not 1 framework on due diligence leaving companies and authorities guessing which rules will apply in each situation."
BusinessEurope called on EU legislators to ensure workable and harmonized rules, advocate for a risk-based approach to due diligence following international standards, and avoid excessive interference in free enterprise principles. The organization emphasized the importance of liability being triggered by companies' actions and not others', with sanctions needing to be proportionate.
European businesses collectively stressed the significance of key recommendations in the ongoing negotiations, underscoring the critical nature of this phase in the legislative process.