Czech Business Today

In the future Czech businesses will have to be more careful about who they do business with. Under new European legislation they will need to ensure business sustainability across entire “value chains”. The Directive on corporate sustainability Due Diligence has advanced in the European legislative process. It aims to promote sustainable and responsible business behaviour. It holds companies accountable for environmental and social transformation within Europe and beyond, but it may cause difficulties for Czech businesses operating at European and global level.

Under the European Commission’s proposal, the rules would apply to large companies from inside and outside the EU with over 500 employees and a global net annual turnover of €150 million or more and to businesses in high-risk sectors with more than 250 employees and a global net turnover of €40 million or more. SMEs are not formally included in the Commission’s February 2022 proposal rules but are likely to be affected by the legislation.

“The preparation of the legislation is already on track. We must prepare for what it will bring and accept and share that responsibility. But if I were radical, I would say that this is the end of free enterprise,” warned MEP Martina Dlabajová (for ANO, Renew), who was preparing an opinion on the subject for the Parliament’s Industry and Energy Committee (ITRE), at a recent CEBRE debate. Among other things, she warned that the proposal shifts all responsibility for sustainability to entrepreneurs, even if problems are solved. Pavlína Kalousová, director of corporate relations at Plzeňský Prazdroj, agrees with Martina Dlabajová in this respect. Both stress that businesses now face many new regulations, which can pose a significant problem. On the other hand, both Martina Dlabajová and Pavlína Kalousová see positives in unifying rules across European borders.

Meanwhile, the European Parliament is inclined to tighten the legislative proposal, which Czech MEP Martina Dlabajová criticises. The member states within the EU Council, for their part, are taking the opposite course and want the rules to be looser – this is also what the position they have agreed on envisages. “Even though the Czech Republic was not able to express its position during its presidency, all states agreed that it is important that preeminent EU companies do not employ people in their supply chains for slave wages and do not pollute the environment,” said Michal Franěk from the Czech Ministry of Justice at the debate.

The Directive could come into force as early as the beginning of 2024. Like Martina Dlabajová and Pavlína Kalousová, Michal Franěk thinks that more focus should be placed on small and medium-sized enterprises and reducing the impact of the Directive on them. The Czech Republic can take the initiative on this issue and use experts to defend the interests of smaller businesses.

Source: EURACTIV.cz