The Czech Presidency of the Council of the EU has submitted a seventh compromise on the Due Diligence Directive for companies. On the basis of this text, the Presidency believes that an agreement can be reached between the Member States “if some flexibility can be shown by all parties concerned”, it indicates in its introductory remarks. The document dated 22 November, a copy of which was given to EUROPE, outlines several compromises on the points that were still a problem for the Member States’ ambassadors to the EU on 18 November.
The definition and scope of the “value chain”
The EU27 struggled to agree on the use of the terms ‘value chain’ or ‘supply chain’. The second term covers fewer activities than the first. The Czech Presidency proposes to get rid of both and introduces a new term which it believes will make it possible to clarify Member States’ thinking in the definitions. It suggests using “chain of activities”.
This term includes not only the production of goods, but also their supply by a trading partner. Thus, the design, extraction, manufacture, transport, storage and supply of raw materials are included in the chain of activities. On the other hand, the provision to end consumers is not included, contrary to what the European Commission had proposed.
The Presidency proposed to remove the concept of an “established” business relationship from the text, which means that the obligations of the Directive apply to the whole value chain, not just to some of the business partners. This no longer seems to be a problem among Member States, although France would like to keep the reference, a source told EUROPE.
Reduced civil liability
As we wrote a few weeks ago, the EU Council wished to differentiate the levels of responsibility of companies that have caused or contributed to an adverse effect on the environment or human rights (see EUROPE 13029/15).
In this seventh compromise, the Presidency proposes to hold companies legally liable when four conditions are met: - damage is actually caused to a natural or legal person; - the company has failed to fulfil its obligations under the Directive; - there is a link between the breach and the damage caused; - the company acted deliberately or negligently.
This means that companies that have indirectly contributed to the damage cannot be held liable.
The EU ambassadors (Coreper II) will meet on 25 November to discuss this compromise, which the experts in the working group will have to approve. The Presidency hopes that this will be done so that the general approach on this text can be formally adopted at the ‘Competitiveness’ Council on 1 and 2 December.
See the compromise: https://aeur.eu/f/4A0 (Original version in French by Léa Marchal)