Streamline Sales Due Diligence in European Union with airSlate SignNow

How to create outlook signature

[Music] today in the EU final push for corporate due diligence law with major compromises eu's corporate sustainability due diligence directive faces Rising opposition since its final draft was provisionally agreed in December but has been fighting for its survival after a last minute change of heart from a number of member states fearing negative business impact hello and welcome I am aori and this is today in the [Music] EU to break down the importance of this legislation and the scenarios regarding the vote on the revised proposal on March 15th we invited in the studio your actives economy editor Anna brunetti hi Anna we know that the terms due diligence and corporate sustainability might be a little bit tricky for most of us to understand so could you explain a little bit what uh we will be talking about today and why is this directive so important so the directive is the result of long-standing campaigns by human rights labor rights environmental Nos and politicians as well from the parliament to all companies accountable for what happens through their supply chain um and it makes it much more relatable to think it that way if we think that the clothes we buy the fonts we buy the food we eat the companies that we pay to fool our heating lighting cars there's a lot of that that actually entails really complex and extended production change chains These Chains uh supply chain value chain they often originate in countries far from Europe but they do have real life impacts on non-european workers and their living environments and what was there before what was happening before this legislation was proposed before this law was proposed there was not a single piece of EU legislation in place to guarantee the companies selling their product and services to European consumers were legally responsible for any run doings in their value chain so this legislation is the one that sets plones on what people have to follow or or what does it do exactly there's been a lot of debate and a lot of changes within the negotiation process so it started from you know a level of standards that was quite ambitious at this moment we have international guidelines mainly set out by the oecd but the difference obviously with having EU legislation and is that it makes it mandatory and binding and also the real difference it makes is that is no longer only for court cases and for people or NOS to take on their battles against wrongdoings there's a legislation that requires a a more long-term approach to how companies change and improve their supply chains so it's really um a longer term sustainability process that makes companies more accountable in their daily practices rather than leaving it up to lawsuits right and you're referring to lawsuits now but do you have any examples that could pain tear image for us yeah actually there are a few um um really somber and really high-profile cases that maybe people can relate to a little bit more one big um tragedy was in 2013 there was this eight floor building collapsing it was a textile uh Warehouse in desh uh the name was Rana Plaza workers there were producing garment for companies including beniton uh primar mango Matalan uh as many as 1,34 um workers died another 2,500 workers were injured so we can see the extent to which this kind of uh Supply chains wrongdoings and the real life effects that they can have another one was for example from French com Energy company total is an energy giant they were sued for human rights violation in Uganda where for 3 to four years several inhabitants were because of land grabbing they were deprived of their means of sustainance uh which resulted in food deprivation shortage of other uh essential Goods so that's also a really interesting case another one that we can think of and e a product that is obviously a consumer favorite which is cocoa and chocolate but we could also talk about coffee which is another uh food staple that is um heavily under scrutiny in its across the supply chain uh so in 2021 uh a US court initiated um a casee a trial against nestl Mars mandelas and other big chocolate companies um because of u a few detected cases uh for of child slavery um so that's another thing that can really make us get us thinking about why increas in scrutiny and accountability across Supply chains is super important now very briefly when was the text proposed and how did we get here so yeah the parliament had been considering proposal for some time they have a responsible business group unit uh but it was only in 2019 when actually D reinders um took up the issue and he kind of added to his speech to become commissioner uh for justice so after he was confirmed then the commission took the Mandate on 2020 but it took a couple of years to then turn into a proposal if you think of how you know the law really revolutionizes the way the corporate practices and corporate accountability is handled um the the consequences from a business perspective are huge and far-reaching so obviously entailed a lot of complicated analysis U so the proposal finally came in 2022 and since then it's been a really happy political battle because of obviously what we've talked about conflict of interests or uh yeah I guess like business constituencies at the national level uh large business associations Big Bus business in general um but also it's interesting to see how the law evolved many large companies were actually being sued in many jurisdictions for really severe wrongdoing so that there was a lot at stake and I think politically it was really sensitive and it still is if we look at what is happening at the moment so is this a reason why there is so much resistance to this loan now two weeks ago actually the Belgian uh diplomats who are you know holding the presidency of the council they really took a real politic approach and they went back to the text and started slashing through the text making a lot of concessions to the point that at this stage is really difficult to justify uh continued resistance to embrace the law because it's to water down yeah well I mean the scope has been reduced quite significantly so it used to cover companies from 300 250 employees up and now it only affects companies starting from a thousand employees and uh and 300 millions of annual turnover which significantly reduces the scope but also the the entry into Force has been staggered across 5 years so the uh companies between, and 3,000 employees and with a turnover of between 300 and 900 Millions will only be affected from 5 years on uh from entry into Force so not much is changing now not now and also there's been a lot of other twe that mean A reduced uh due diligence requirements on different parts of the supply chain such as the financial sector there was a political statement that was due to come to revise the possible inclusion of financial sector that has been scrapped there was a clause for manager remuneration incentives which would have kind of incentivized manager to follow and monitor their transition plan more closely and respond on those plans but uh that has been scrapped as well so you could have argue that that piece of corporate governance has been taken away and um for one of our sources for example that was the only piece in new law that actually talks to uh corporate governance um so far we have reporting requirements and disclosure requirements but that was a very important initial step towards governance and that's not there anymore so there have been a lot of concessions that can already be claimed as victories from you know the parties that have been pushed for watering down and there's not much justification left so what's the argument that you encounter mostly one of the arguments that is been used the most is that smes will be unduly affected but that is now sounding like a very outdated argument because first of all they're not directly affected they're out of the scope now completely and fully but also the undirect burden uh that comes from them dealing as either supplies or buyers to larger companies across the supply chain that's also been tackled uh because this law actually solves pre-existing issues for for smaller companies by requiring larger companies that deal with them to um take care of the administrative costs of due diligence sometime Financial costs but also to give them resources to deal with due diligence and also guarantee fairer contractual terms with smaller companies so it actually proposes more solutions than others and you mentioned already that the Belgian presidency has done a lot of work on this legislation what can we expect what's the future for it so on Friday uh we'll see we should finally see a vote that has been postponed for four times now in the past few weeks there is significant public pressure from business and Civil Society to do so instead member states are listening to a minority of extreme business voices who have so far rejected every proposal and continue to do so Seda volters MEP with the social Democrats from the Netherlands who serves as the reporter of the corporate ability due diligent directive addressing the delays of the council in a press conference in the previous month the reason why it has been postponed is that some member states that were previously back in the legislation and that could really tilt the vote in one way or the other have then kind of signals that they would have urned on the backing of the law who are these member states well the largest one will be Germany Germany has kind of pivoted towards abstracting the law when it's internal constituencies represented by the liberal party fdp has become really vocal and active against it and they managed to kind of work to build a larger stun which spread to other countries but there were existing pre-existing resistance in other countries for example France has been quite active in getting the financial sector to be excluded from the law apping the the scope of the legislation to companies uh with 5,000 employees or above which would then Ally to their national law and the Italian case is a little bit more obscure so what's happening with Italy so there's been ongoing resistance it looks like it's more of a political efforts to talk to the electorate to the National elector in pre-electoral times so in my personal chat to alsoo who's the minister for businesses Enterprise and made in Italy he was signaling that they were still resisting to uh backing the law even though the Belgian uh negotiators were already proposing a substantially amended text so it continued to signal to me as well that um they were really going to continue to push for more concessions even though the window for further negotiations is virtually non-existent at this stage if you think that usually it is the trilog stage the the actual phase that is meant for negotiations between co-legislators after that wraps up which for this Law happened in December Co legislators are not really meant to substantially amend the text is more for smaller or language related yeah to exactly as the European elections approach there is still time for member states to get their act together and to stop blocking this law but that time is rapidly running out mentioned L Walters snd MP but what we're seeing is a trend towards using this stage for political trade-offs and bar farther bargain so many of our sources have kind of brought up the problem right what did they say what the problem the only elected uh legislator which is the parliament at this stage is not as involved as as before so clearly if it becomes a political game between National among National Ministries then it really poses an accountability problem and what should we keep in mind regarding this topic I guess what we could remind politicians is that uh it's no longer just an issue of swooping their potential constituencies or big businesses but it's really about thinking and accounting for the social costs that every legislation they they talk about could have thank you Anna for breaking down for us this very important piece of legislation I am aori and this was today in the EU visit your active to stay on top of the latest news sign up for a podcast newsletter if you haven't subscribed yet you can find us on Spotify Apple podcast or wherever is that you get your podcast this episode was produced by myself Miriam s deada and Neta y thank you for tuning in we will be back [Music] tomorrow as part of our commitment to accuracy inclusion and transparency your active is part of the trust project