LET'S BLOCK THE CORPORATE DUE DILIGENCE DIRECTIVE

LET’S BLOCK THE CORPORATE DUE DILIGENCE DIRECTIVE

The Czech Chamber of Commerce (HK ČR) is calling on the Czech government to abstain from voting on the Corporate Sustainability Due Diligence Directive at a meeting of the Committee of Permanent Representatives of the European Union (COREPER I)The abstention is seen as a rejection of the proposal. The Czech Republic would thus have joined the ranks of Germany and Austria, which have already announced that they will abstain.

The directive, presented by the European Commission in 2022, sets out rules for the compliance obligations of large companies, their subsidiaries and business partners on their business’s adverse environmental and human rights impacts.

It is intended to guide companies in identifying, assessing and addressing the issues. This will require companies to know their entire buyer-supplier chain and to screen not only their direct but also their indirect suppliers, requiring them to demonstrate the carbon footprint of their entire product life cycle, from the initial sourcing of raw materials through distribution to disposal. At the same time, businesses will be held accountable not only for their employees but also for entire communities affected by the activities of the complete chain.

HK ČR does not like that the private sector is supposed to exercise control instead of the state administration. „Companies will not have the capacity to influence a complex supply chain that often spans several countries or continents. If the state administration cannot control and intervene in third countries, neither will businesses themselves,” believes Tomáš Prouza, who thinks the directive will be unworkable in practice and will only oblige businesses to „unnecessary paper exercises”.

Furthermore, HK ČR warns that the draft directive will require significant financial costs and further increase the excessive administrative burden on entrepreneurs. Companies will have to procure audits, reconfigure internal processes, and sometimes pull out of supplier relationships.

HK ČR calls for the directive to be rationalised after this year’s European elections and also addressed the demand for a blocking minority to Minister Pavel Blažek in a letter at the end of January.

The proposal is not aimed at small and medium-sized enterprises, yet HK ČR is rightly concerned that several obligations in the supply chain will be transferred to small companies or lead to their exclusion from the chains.

Source: komora.cz