Czech Business Today

Member States have given the green light to the agreement reached in the trialogue on the sustainability of businesses in the field of due diligence. This is a significant disappointment for business. On 15 March 2024, at a meeting of ambassadors, Member States gave their thumbs up to an agreement on the text of the Directive on the corporate sustainability due diligence that goes well beyond the general approach reached in the Council in November 2023.

BusinessEurope Director General Markus J. Beyrer commented on the outcome: “The new due diligence rules bring unprecedented obligations and set tough sanctions with potential existential consequences for companies. SMEs, although theoretically outside the scope of the Directive, will be negatively affected as they form the largest part of value chains. We regret that many fundamental issues have been left unresolved. Industry has always been ready to be a constructive partner and work towards achieving workable and harmonised EU rules on this important issue.”

“This is bad news for business as the new regulations will further weaken the competitiveness of Czech and European companies. It is no coincidence that other European associations also find this problematic. From the point of view of the Czech Confederation of Industry (SP CR), this is another blow for companies, which will further complicate doing business in Europe at a time when European business is sounding the alarm,“ comments Daniel Urban, Director General of SP CR, on the adopted Directive.

The general approach reached in the Council, even though it was not the most ideal result for business, was still a tenable compromise and firm red lines. After the start of the trilogues, the effort was to keep the text as close as possible to the general approach and to avoid amendments by the EP, which returned the proposal to the same beginning.

Business called for meaningful harmonisation and for a clear and tangible approach that would encourage European companies and help them contribute to more sustainable supply chains. Due diligence should be seen as a positive measure under international frameworks – not as a means of punishment. Due diligence has value in identifying problems and risks to kick-start a process of trust throughout the chain.

For SP CR, it is a disappointment and another blow to the businesses on which the future prosperity of the EU depends, kick-starting growth and new jobs. SP CR    has been actively involved in the negotiation process through BusinessEurope and in intensive cooperation with, the Ministry of Justice of the Czech Republic, responsible for this proposal.

Source: Vladimíra Drbalová, Confederation of Industry of the Czech Republic

In addition The representative of the Czech Chamber of Commerce, Alena Mastantuono, adds:

„The proposal shifts the duty of control from the state administration to the private sector and assumes that companies can influence a complex supply chain that often spans several countries and continents. However, suppose the public administration is unable to control and intervene in third countries. In that case, neither are the businesses themselves, who face fines for non-compliance of up to 5% of their net worldwide turnover or reputational risk. Because of the lack of guarantees, companies fear that this instrument could be used to damage them unjustifiably.”

Source: idnes.cz, Alena Mastantuono