European Directive on Corporate Due Diligence: the Council of the European Union approves a text weakened by France

Paris, December 1st, 2022 – This morning, the Council has finally approved its general approach on the Corporate Sustainability Due Diligence Directive Proposal. The text has been considerably weakened because of pressure from France, despite the Government’s public statements this week. 

The Member States’ Ministers met this morning to vote on the proposed European Directive on multinationals’ duty of vigilance, which aims to oblige companies to prevent human rights and environmental abuses, and to hold them liable in case of damage. 

For weeks, France has been working behind the scenes to weaken the text: it threatened to form a blocking minority to exclude a whole part (known as “downstream”) of the corporate value chain from the scope of the text. Having largely won the negotiations last Friday, this week France sought to undermine the few remaining obligations for the financial sector. 

As a result, although the Council approved the text this morning, the Commission’s initial proposal – though far from ambitious – has been eroded on all sides by the negotiations between Member States.  

The loopholes in the text are striking:  

• The scope of the duty of vigilance does not include the use of products sold by companies, nor the activities of clients of service companies, nor exports of arms or surveillance equipment.  
• Under pressure from France, the obligations for banks are extremely limited and, in any case, only optional for Member States.  
• Companies are free to postpone the prevention or cessation of certain abuses simply because they chose to prioritise more serious abuses, and, if it is too damaging to their business, they are not required to terminate their relationship with a supplier that has been violating human rights. 
• The definition of environmental damage, which was already incomplete, is further reduced, with the deletion of key terms such as the notion of “ecological integrity” [1]. The liability of companies in this area is brought to naught, as only damage to persons is concerned. 
• The few elements addressing directors’ duties and remuneration, which were already insufficient in the Commission’s proposal, have simply been removed. 

The contradiction with recent statements from the French government is obvious: Elisabeth Borne recalled France’s pioneering role in this area in response to an oral parliamentary question on Tuesday; and the Government issued a press release last night “denying an exemption request for banks.” 

Our organisations call on the government to put an end to this double talk, and to align its actions with its public statements in the upcoming negotiations. Next step: the debates in the European Parliament, after which the three European institutions will negotiate an agreement.