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The negotiators of the European Parliament and member states agreed on some points about corporate accountability rules this week, and the Spanish EU Council Presidency is expected to push on the talks starting in September in order to strike a deal before the end of the current term.
Negotiators from the European Parliament and the EU Council met in Strasbourg on Tuesday (11 July) for the second round of interinstitutional negotiations – known as trilogues – to find an agreement on the corporate sustainability due diligence directive (CSDDD).
First proposed by the European Commission in February 2022, the directive seeks to ensure large companies are held responsible for adverse impacts on human rights and the environment throughout their value chain. The proposal lays out obligations for companies, as well as a civil liability regime for victims of corporate harm.
Member states and the European Parliament each adopted their common positions and are now negotiating to strike a deal that would allow them to adopt the legislation before European elections in June 2024.
Despite the short timeframe available to find an agreement, however, the Spanish presidency did not push for progress on the most contentious points in Tuesday’s trilogue.
While political issues on the agenda included company scope, level of harmonisation of the rules, due diligence requirements at group level, and remediation measures, negotiators mostly focused on less divisive topics, such as stakeholders’ engagement.
While they managed to agree on some points, discussions will need to continue in September, an EU official familiar with the talks told EURACTIV.
The need for more negotiations was also pointed out by EU Justice Commissioner Didier Reynders, who said the trilogue was “productive” but added that “more discussion is still needed”.
Divisions
The proposed law has created divisions both among member states and EU lawmakers.
While member states reached a common negotiating position on the file in December 2022, there are still many points on which disagreement persists. In particular, EU countries only agreed to a narrow and vague definition of “chain of activities” concerning the scope of the directive.
Moreover, they decided to leave financial services outside mandatory due diligence checks, a move spearheaded by France in particular, which worries both the Parliament and the Commission.
On the Parliament’s side, despite a last-minute U-turn by the conservative EPP group on some aspects of the proposal, lawmakers managed to adopt their common position on 1 June 2023.
In their position, they included finance under mandatory due diligence checks. Moreover, they agreed the rules should partially apply to the downstream part of the value chain as well, in order to cover the sale, distribution, transport, storage, and waste management of products and services, a position which is unlikely to be supported by member states.
Tight timeframe
According to a source familiar with the negotiations, the Spanish Council Presidency is likely to “devise a plan” before September in order to find common ground among the parties and make sure everyone agrees on these divisive points.
At the same time, however, given these stark divisions, there are some concerns that the timeframe will be too short to get an agreement.
“There should be negotiations every two weeks to make an agreement feasible before the end of term,” the source told EURACTIV.
The next trilogue is expected to take place in early September, while more technical preparatory meetings will be held until the end of July.
[Edited by János Allenbach-Ammann/Zoran Radosavljevic]
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