EU negotiators arm CSDDD text against last-minute political push
EU negotiators aiming to secure the last crucial steps on the bloc’s corporate due diligence law (CSDDD) went back to the drawing board to bulletproof the text from further member states’ opposition over the weekend, hoping to secure a final deal shortly by Friday at the latest, Euractiv understands.
After blocking signals from Italy, Austria and Germany forced them to waive a key vote on Friday (8 March), Belgian diplomats and technical staff from the European Commission are adding language, in the CSDDD text, spelling out that SMEs will not be negatively impacted by the law.
Additional reassurance being considered includes a ‘joint political statement’ by co-legislators as well as a future review by the EU executive of the potential impacts of the law on smaller businesses – which could entail input from Commissioner Thierry Breton’s Growth unit.
The amendments to the CSDDD are being tested with member states ahead of a more formal vote poll among envoys from the bloc’s 27 countries, which is now scheduled on their agenda for Wednesday.
Two sources close to the matter, however, told Euractiv discussions may carry on until Friday, when a separate vote on packaging measures is also taking place – as comments by Italy’s Minister for Enterprise, Adolfo Urso, on Thursday (7 March) suggested the final steps on the two legislations may now be politically bundled together.
Urso signalled on the sidelines of Thursday’s meeting of industry and competitiveness ministers that the concessions put forward through the latest Belgian CSDDD compromise fell short of quelling the country’s reservations.
“It is a text that can still be improved,” Urso told Euractiv.
“In particular, we think it can be improved for what concerns the requirements to which SMEs are subject,” he said.
“Our position is a position aimed at improving – always, and for as long as it is feasible,” he added when asked about the shrinking time window left to allow the legislation to get the final stamp of approval at the last plenary session of the current Parliament’s mandate, in April.
Urso also said he had held bilateral meetings with his Austrian and German counterparts, confirming they would have advanced a “shared position” on the file.
“These statements, on the day before a vote, amounted to effectively blocking the file,” Marc-Olivier Herman, EU Policy Lead for economic justice at Oxfam, told Euractiv.
SMEs argument ‘not credible’
Although echoing previous narratives by Germany, France and Austria, the timing of Urso’s remarks on SMEs carrying excessive obligations was questioned by some observers, as last week’s amendments to the CSDDD text reduced the scope of the legislation only to affect companies with 1,000 or more employees and with an annual turnover of €300 million or over.
For comparison, based on EU criteria, SMEs are defined by a staff headcount of under 250 and an annual turnover anywhere below the €50 million threshold.
“So, clearly, in terms of the law’s applicability, all concerns on a potential direct burden on SMEs had been fully addressed,” a source close to the matter told Euractiv.
However, some national criticism had shifted to the indirect burden that smaller companies would have to shoulder in their role as business partners of larger businesses across the supply chain. On this point as well, though, those in support of the law have pointed out that the text of the Directive would provide guarantees that weren’t in place before the proposal.
“The Directive actually solves some existing problems for SMEs by asking larger companies to take on part of the administrative and financial burden [of dealing with due diligence in their part of the supply chain],” the source said.
The Business and Human Rights Resource Centre – a group that tracks companies’ labour and environmental practices – highlighted that, among others, in-scope companies would for example be required to provide support and resources to their smaller suppliers to comply with due diligence, and would be called to guarantee fair contractual terms with them.
SME associations, including that of Italy (CNA) have also repeatedly spoken in favour of the CSDDD. In a joint statement sent to the Italian government on Thursday and seen by Euractiv, a group of 21 signatories including CNA ramped up their calls to stop blocking the EU law.
“Given Italy’s role in [CSDDD] negotiations, we are asking the Italian government to favour the progress of legislative work,” the letter read.
Oxfam’s Herman told Euractiv: “To use the SME argument at this stage is not credible. What is happening now is basically related to the impact on very large businesses,” he said.
If any further concession was made on the CSDDD, there would be little left in the text to actually ensure responsible business in the downstream value chain, he argued.
“To think that, at this late stage, they can get away with anything, is pitiful,” Herman added. “This will come back to haunt policymakers at some point.”
Packaging legislation also on the line?
The Italian minister’s ambition to “continue to improve” existing draft laws goes beyond the CSDDD.
Urso told Euractiv that “improving” the CSDDD “would contribute to improving other dossiers we have in front of us – for example the one on packaging, where some steps forward have been taken and […] can continue to be taken”.
MEPs and national ministers clinched a provisional agreement on the packaging and packaging waste regulation (PPWR) last Tuesday (5 March). The finalised text saw significant concessions and exemptions handed to the packaging sector, as single-use paper packaging, as well as single-use takeaway products, escaped a ban – and a wider array of products were spared from stricter reuse targets.
“If what Urso is indicating is true, then that’s also very concerning,” said Herman.
“There was an agreement in place, so it would be very disrespectful to both the legislative process and the democratic balance,” he said.
Significantly altering high-level agreements sealed between member states and the Parliament in trilogues would effectively equal to overturning the role of the parliament, “the only EU institution directly elected by citizens, which is clearly very problematic”, Herman added.
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