On Friday 15 March, the Member States’ ambassadors to the European Union (‘Coreper’) finally approved the provisional agreement reached with the European Parliament on the directive that will provide a framework for European corporate due diligence, but not without making a number of important changes.
The text of the latest compromise proposed on Friday by the Belgian Presidency of the Council of the EU broadly takes up the guidelines already validated during the previous attempt at approval (see EUROPE 13366/12), although this did not receive a qualified majority of Member States.
The thresholds for the companies concerned have been raised, and the directive is to be applied gradually: 3 years after adoption of the text, firms with more than 5,000 employees and sales of more than €1.5 billion will be affected. These thresholds rise to 3,000 employees and €900 million in sales after 4 years, then to 1,000 employees and €450 million in sales after 5 years.
Originally, the provisional agreement was aimed at companies with more than 500 employees and a turnover in excess of €150 million (see EUROPE 13314/12).
The category of high-risk sectors has also been removed by the Member States. This was intended to reduce the application thresholds for certain types of company defined as crucial. The financial sector is still exempt from obligations, and the definition of the ‘value chain’ still excludes customers.
In addition to Germany, whose opposition to the directive in early February sparked off hostilities (see EUROPE 13341/7), nine countries abstained from the vote: Slovakia, Sweden, Malta, Hungary, Lithuania, Estonia, Austria, Bulgaria and the Czech Republic.
Italy, which had expressed its opposition to the latest compromise, wanted to obtain concessions in return for its vote on the packaging regulation, approved by Coreper on the same day (see other news). France, for its part, voted in favour of the Belgian compromise.
The European Parliament’s rapporteur for the text, Lara Wolters (S&D, Dutch), welcomed this outcome. “Despite the political games being played by Member States in the run-up to the European elections, we never gave up. This project was simply too important and too big to fail. This law will have major consequences throughout the world and will prevent companies from looking away from human misery and destruction”, she declared.
However, a number of NGOs have expressed their regret at the significant reduction in the text’s ambition. “The last-minute changes made to appease certain Member States have considerably reduced the scope of what the directive could have achieved”, said Isabella Ritter, EU Policy Officer at the NGO ShareAction. She added: “By reducing the number of companies covered by the legislation by more than half, it seriously compromises its original intentions, to the detriment of people and the planet. What’s more, by gradually introducing the measures agreed today, we are unlikely to achieve tangible results for another ten years or so “.
The text must now be ratified by Parliament before being officially adopted by the 27 EU countries.
See the text voted by Coreper: https://aeur.eu/f/bd3 (Original version in French by Isalia Stieffatre)