Dáil Éireann Debate, Thursday - 7 April 2022
19. Deputy Jim O'Callaghan asked the Tánaiste and Minister for Enterprise, Trade and Employment his views on the proposal for a European Union directive on corporate sustainability, due diligence and amending directive 2019/1937; and if he will make a statement on the matter. [18477/22]
View answerA proposal for a Directive on Corporate Sustainability Due Diligence was published by the European Commission on 23rd February 2022. The proposal, which had previously been referred to as the Sustainable Corporate Governance Directive aims to reduce the adverse environmental and human rights impacts of companies by introducing new obligations on companies.
The proposal will apply to large companies, both EU and non-EU - SMEs are not directly within scope but may be indirectly impacted under the proposal – for example, if they are part of a large company’s supply chain. Such companies will be required to conduct human rights and environmental due diligence to identify actual or potential adverse impacts and prevent, mitigate, or minimise the extent of such impacts within their own operations, their subsidiaries and their value chains. The effectiveness of the due diligence measures must be assessed at least annually.
Larger companies will be required to adopt a plan to ensure that their business model and strategy is compatible with the transition to a sustainable economy and the limiting of global warming to 1.5 °C, in line with the Paris Agreement.
Directors, when fulfilling their duty to act in the best interest of the company, will be required to take into account the consequences of their decisions on sustainability matters, including, where applicable, human rights, climate change and environmental consequences - in the short, medium and long term.
The proposed Directive requires companies to establish procedures to handle complaints from those adversely affected by company operations and from other key stakeholders. The Directive would also provide for the designation of supervisory authorities at national level and a civil liability regime in relation to companies who fail to meet their obligations.
Ireland is supportive of the objective of the proposed Directive which should promote responsible business conduct and we will seek to ensure that the proposals strike the right balance by providing effective protections whilst ensuring that the measures to be implemented by companies are clear, proportionate, and enforceable. It is important that measures such as those proposed are on a cross EU basis in recognition of the complex, international nature of many supply chains and to ensure harmonisation, promote policy coherence, and avoid the risk of fragmentation within the EU single market.
Consideration of the proposals is at an early stage and is ongoing across EU Member States. My Department is engaging at EU working party level to clarify the practical implications for stakeholders. Giving the complexity of the issues being addressed, negotiations at EU level may well continue through the remainder of this year and into 2023. My Department has begun a process of engagement with key stakeholders and intends conducting a public consultation on the proposals in due course.
