The demands for an EU law on due diligence is gaining more and more supporters. Following the announcement of EU Commissioner for Justice, Didier Reynders in April to present a Commission proposal at the beginning of next year, there are now more voices that support such a law. The new German Presidency also makes the subject of due diligence one of its priorities.
In April 2020, Commissioner for Justice, Didier Reynders announced the presentation of a Commission proposal on due diligence in early 2021. A study commissioned by the Commission once again showed that the approach of companies’ voluntary commitment is unsatisfactory. On 19 May 2020, Trade Commissioner Phil Hogan told the “OECD Forum on Responsible Business Conduct” that he would support the initiative of the Commissioner for Justice, Didier Reynders.
The Commissioner for Jobs and Social Rights Nicolas Schmit too ensured in connection with the presentation of goals of the German Presidency “the full support of the Commission regarding the commitment of the German Presidency for decent working conditions in global supply chains”. The German Presidency also suggests an Action Plan: “We are committed to an EU action plan to strengthen corporate social responsibility in global supply chains that promotes human rights, social and environmental standards and transparency, and which takes the experiences and lessons learned from the COVID-19 pandemic into account”. This shall take place by implementing the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The German Presidency will hold a Supply Chain Congress on 6 and 7 October 2020. Reynders said in an exchange with civil society actors on 8 June 2020: “We have to be quick”. The launch of the official consultation has been planned for September to enable the Commission Initiative to be presented in March 2021.
Exchange between MEPs and experts
During a hearing in the European Parliament, Markus Krajewski, one of the invited experts and co-authors of the Policy Briefing for Parliament, referred to the important factor that all businesses, independent of size and sector, would come under the legislative act and that all human rights violations were covered. The regulation should be a stand-alone regulation. Krajewski expressed concerns that the result might be a legislative act, which would combine Directors‘ Duties, hence obligations of members of the board have towards their company, and due diligence. NGOs too ask Reynders in a joint letter to clearly separate these two initiatives. Corporate due diligence shall apply to all businesses – including SMEs – and not only to those, who are subject to a regulation on Directors‘ Duties. Beata Faracik, also co-author of the Policy Briefings, addressed in relation to the inclusion of SMEs, the option of a slower “phasing in”.
Demands by the Chamber of Labour and civil society
A successful and ambitious European regulation could ensure that at last the yearlong efforts of civil society could bear fruit. The Chamber of Labour, as part of a civil society alliance - the Treaty Alliance Austria – has written a letter to the Commission. It expressly welcomes the considerations on a European regulation. This shall be implemented applying UN principles and in addition, the EU should also enter the ongoing negotiations at UN level. Effective access to rights and legal redress shall also be guaranteed. The letter, supported by the AK, emphasises that the European regulation has to apply to all businesses, which offer products or services in the Single Market. Apart from that, the integration of respective trade unions in the Member States is also a key requirement to protect workers’ rights.
Review of EU trade policy
On 16 June 2020, the EU Commission launched a comprehensive review of EU trade policy, which, according to Trade Commissioner Phil Hogan had become – among other – necessary for (geo)political reasons. Whilst the USA had for some years increasingly rid herself of her global leadership role, China was becoming increasingly more important – both as a partner and as a “systemic rival” – as Hogan explained before the Committee on International Trade of the European Parliament. However, the probably most decisive reason for reviewing the EU trade policy is without a doubt the Coronavirus crisis and its catastrophic impact on the economy and global trade. The forecast for the latter predicts a decline between 10 and 16 percent in 2020. In view of this massive crisis, the review shall show on the one hand the contribution, which trade policy makes to a stable socio-economic recovery and a strengthened EU and how it can pave the way towards an “open strategic autonomy” on the other. Key issues from the Commissions’ point of view are for example the role of SMEs, the support of the green transition as well as ensuring fair competition on equal terms. In order to ensure this as best as possible, the Commission has launched a public consultation, which is running until 15 September 2020.