Dáil Éireann Debate, Tuesday - 13 December 2022
68. Deputy Paul Murphy asked the Tánaiste and Minister for Enterprise, Trade and Employment if the Government will seek to exclude banks and investment funds from the scope of the corporate sustainability due diligence directive; and if he will make a statement on the matter. [62115/22]
View answerThis question is about the corporate sustainability due diligence directive. It is potentially very important European legislation that would make corporations responsible for human rights abuses, labour rights abuses, environmental abuses and consumer rights abuses throughout their supply chain. Unfortunately, it is being subject to intense lobbying by big corporations to try to water it down and make it ineffective. Most recently, they have succeeded in a serious watering-down of the negotiating position of the European Council in the form of the partial exclusion of the financial sector, which means its effective exclusion.
I thank the Deputy. As he knows, Ireland has been supportive of the objective of the proposed directive on corporate sustainability due diligence, which will play a significant role in promoting responsible business conduct. This is a complex proposal with far-reaching implications for companies and stakeholders concerning the prevention of adverse human rights and environment impacts. An EU-wide framework is best placed to both support the functioning of the Single Market and influence respect for human rights and the environment beyond the EU.
While I welcome the progress made and the speed at which this has been accomplished, I had greater ambition for the proposal in a number of areas, including favouring a value chain-based approach, in recognition of the fact adverse human rights and environmental impacts can occur throughout the value chain, and a greater focus within the directive on the gender aspects of the proposal, as women can suffer disproportionately from the consequences of adverse impacts. I raised these at the Competitiveness Council meeting on 1 December.
On the Deputy's specific query, a particular issue arose in the final text that came before Council proposing discretion be provided to member states regarding the directive's applicability to the financial sector. Ireland considers that it should apply to relevant companies across all sectors of the economy, including regulated financial undertakings. Furthermore, Ireland wants a harmonised approach on this issue to ensure policy coherence and avoid the risk of fragmentation within the general market. Accordingly, Ireland did not support the adoption of a general approach on the proposal. However, a general approach is now being adopted and the process now moves to the trilogue negotiations between the Council, the European Commission and the European Parliament.
I understand a final directive may not emerge until the latter part of 2023 following the conclusion of the trilogue process. Therefore, it is still premature to focus on implementation of the proposal, including any policy choices that might arise for member states, in advance of the Parliament's trilogue with the Council and Commission, during which further debate will no doubt be had on such matters. I assure the Deputy I will be keeping a close eye on the trilogue process.
I thank the Minister of State. It is good to hear the Government opposed the watering-down that happened at the latest European Council meeting. Reuters reported that at an earlier stage in the negotiations the Government indicated it wanted to exclude asset managers and institutional investors from the scope and that it said in a submission it could not signal its agreement to including financial undertakings. Was that accurate?
Oxfam's lead on this has commented about the effective exclusion of the financial sector, in that whether to include that sector is left up to the member states. The consequence will be the financial sector can continue to bankroll human rights violations and damage to the planet without being held accountable as it remains up to each European country to decide whether it wants to make banks and other financial players clean up business. We could have huge investment in fossil fuels by private investors, the destruction of indigenous peoples' living conditions and environment and these private entities can now be excluded by member states.
Again, we do not support the overall adoption and we raised concerns about the financial sector. There was an issue during the early stages of the negotiation that there were different treatments in this directive from other directives. We wanted to support consistency in various directives around that. We also had concern about the inclusion within the scope of national social security schemes and institutions for occupational retirement provisions. Those concerns were superseded by our overall concerns about the ability of member states to exclude financial institutions, as highlighted by the remarks from Oxfam.
I hope the Parliament will adopt a strong position and that in trilogue this will be strengthened again and the financial sector brought back in. If not, that creates a danger, as the Minister of State pointed out, of a patchwork of different regulations in different countries. That is against the whole purpose of the EU and also creates pressure for a race to the bottom because investors may locate in countries where they are not going to be held responsible for what is happening lower down the value chain. Let us say that does not happen and the Council's position on the financial sector is ultimately adopted. In that case, will the Government give a commitment it will include the financial sector and that it will not take the option that may be open to it of not including the sector? Ireland could create a good example by saying it is going for a high level of responsibility and that finance will be included in this country.
The trilogue process is going to be quite challenging and Barry Andrews MEP is working very hard on this within the Parliament. He has kept in close contact with me and my officials on this. I do not want to comment on what the potential outcome of that process may be. I am not going to speculate on that, but we have laid our cards very strongly on the table at Council level around this issue.
I have 11 and a half minutes left on the clock and two Deputies who have waited very long and very late. If we can be a little economical with our time, we will see if we can reach both of those questions.
