EC proposal for a Directive for Corporate Social Responsibility

EU commission

Two years after the announcement by European Commissioner Reynders, the EC has finally published this month its proposal for a European Directive for Corporate Social Responsibility. Regrettably it is estimated by civil society actors, that only 1% of all European companies fall under the law and companies do not have to investigate their entire chain for abuses. They can transfer their responsibility to their suppliers via a contractual clause.

Those that fall under the law include all EU limited liability companies of substantial size and economic power (with 500+ employees and EUR 150 million+ in net turnover worldwide) and other limited liability companies operating in defined high impact sectors, who have more than 250 employees and a net turnover of EUR 40 million worldwide and more.

The earlier announced ban on the import of products made with forced labour is not part of the  part of the proposal now presented, but might still be introduced as a separate legal instrument.

According the European Trade Union Confederation (ETUC) the new proposal falls far short of what is needed to protect human rights and the environment. “It particularly falls short on the concrete involvement of workers and trade unions in shaping and monitoring sustainable business due diligence strategies, aimed at preventing or ceasing adverse impacts on human rights and the environment”. See further ETUC’s feedback.

Now that the proposal has been published, the EU Member States and the European Parliament are preparing their reactions to the proposal. Negotiations will then start between the European Council and the European Parliament. A plenary vote is expected for July 2022. Once they have reached an agreement and approved it, Member States will have another two years to transpose the Directive into national law.

See further update by the European Commission