Members of the European Parliament’s Committee on Legal Affairs (JURI) adopted the report by Lara Wolters (S&D, Dutch) on the corporate sustainability due diligence directive (CSDD) on Tuesday 25 April. The compromise amendments reached the previous week in Strasbourg were adopted, including those that were questioned by some groups (see EUROPE 13164/4).
If the European Parliament confirms this vote in plenary (probably on 1 June), it will adopt a position quite different from that of the EU Council (see EUROPE 13075/1). The negotiator of the text, Lara Wolters, has expanded the scope of companies subject to the directive, specified the type of sanctions that Member States will have to impose on companies that do not comply with the obligations, and strengthened access to justice for victims and their representatives (see EUROPE 13164/4, 13163/1).
“If companies do not comply with the rules, they must be sanctioned and if damage occurs that should have been avoided, the victims must be able to get justice in court”, the negotiator said after the vote.
With more difficultly, she was able to maintain in the European Parliament report the inclusion of the provision of financial services in the scope of the text as well as the obligations for business leaders to implement a detailed action plan to be consistent with the Paris Agreement. As proposed by the European Commission, MEPs also kept the link between these obligations and the bonuses of leaders of companies with more than 1,000 employees.
The different political groups welcomed the adoption, even if some had to make concessions. “I would have liked to have had maximum harmonisation and to remove the duties for leaders, but we will see what happens with this in the trilogues”, said the text’s shadow rapporteur, Axel Voss (EPP, German).
Indeed, within a few weeks, negotiations between the European Parliament and the Council (‘trilogues’) could begin, if the report is adopted in plenary.
Stakeholder reactions
The European Trade Union Confederation (ETUC) welcomed the report, which it said created “an increased role for trade unions”. The text has indeed broadened the definition of affected persons to include, among others, trade unions.
However, other organisations felt the text was flawed in several respects. The burden of proof, which remains with the authorities to demonstrate that a company has not complied with due diligence, poses a major problem of access to justice for victims, according to the NGO Friends of the Earth Europe. While Lara Wolters initially wanted to shift the burden of proof to companies, she was unable to gather enough support to do so (see EUROPE 13168/21).
The NGO Finance Watch denounced a “too narrow” definition of the value chain for financial services, which could exempt certain investment activities, it said. (Original version in French by Léa Marchal)