15 Mar 2024

A diluted EU due diligence law is still better than none

Fairtrade International and the Fair Trade Advocacy Office statement on the agreement of the Corporate Sustainability Due Diligence Directive at the Committee of the Permanent Representatives of the Governments of the Member States to the European Union (COREPER).

Today, EU Member states finally agreed to give green light to the Corporate Sustainability Due Diligence Directive (CSDDD) during the meeting of the Committee of Permanent Representatives (COREPER).

The Directive, still subject to the European Parliament approval, will be a diluted compromise which was only possible after a frustrating process that has severely undermined the credibility of the EU’s legislative process.

“We regret that the political agreement reached in December 2023 was not honoured”, said Meri Hyrske-Fischer, Human Rights Advisor at Fairtrade International. The directive will only apply to very large companies (moving from the 500 employees’ threshold to 1000; and from a €150 million turnover to €450 million). Additionally, the notion of high-risk sectors has been removed from the scope and concessions have been made on application times: Only large companies with more than 5000 employees and a turnover of more than €1500 million must start applying the provisions in 2027, followed by a staggered approach until 2029. “The people and planet deserve better and faster action from our leaders,” concludes Hyrske-Fischer.

Despite these drawbacks, after weeks of uncertainty and against the ticking clock, the COREPER outcome is better than leaving the meeting room without a deal.

The CSDDD provides certainty and sets expectations and requirements that are likely to become mandatory to a much larger group of companies in future. Also, it avoids the potential chaos of navigating a patchwork of national due diligence laws and establishes a common legal framework to level the playing field.

On a positive note, Fair Trade organisations commend the recognition of living income as a human right alongside living wage in the Appendix of the CSDDD, making it a right that companies directly covered by the directive must respect.

“We welcome that under the provisions of the directive, companies will have to evaluate and mitigate the impact of their purchasing practices on human rights and the environment and are expected to contribute to living wages and incomes for workers and farmers,” states May Hylander, Policy Officer at the Fair Trade Advocacy Office. Additionally, the CSDDD emphasises shared responsibilities, concrete support to suppliers and meaningful stakeholder engagement with potentially affected rightsholders. “These are much needed elements that have the potential to repair unbalances in value chains and make them more sustainable,” she concludes.

Fairtrade International and the Fair Trade Advocacy Office encourage the European Parliament to support the compromise.