Thursday

29th Sep 2022

Opinion

How industry watered-down new EU supply chain rules

  • The rules say the EU Commission's regulatory board is not supposed to discuss individual files in meetings with lobbyists, but the evidence in our report reveals a major loophole: they can be — and are — lobbied in writing (Photo: Peter Teffer)
Listen to article

This is the story of how the European Commission, with more than a little help from business lobbyists, sabotaged its own proposal for a progressive law to hold companies to account for abuses in their overseas supply chains.

Such a law is long overdue to help avoid atrocities such as oil spills in the Niger delta, and the building collapse in Rana Plaza, Bangladesh which claimed over 1,100 textile workers' lives.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In February this year the commission published its final proposal for the Corporate Sustainability Due Diligence (CSDD) directive.

But environmental groups, consumer associations, human rights groups, and trade unions alike immediately cried foul when they saw the proposal in black-and-white.

Contrary to positive initial signals, the final proposal contained no guarantee of liability in European courts; barriers for access to justice for victims would not be removed; directors' duties had basically been dropped from the file; there were no enforceable climate obligations for companies; and the number of companies covered had been slashed.

So how, exactly, had the commission's original intentions been so watered-down?

It was always clear that industry lobbies would have a lot to say about a proposal to hold them accountable for wrong-doing in their overseas supply chains.

Not all were opposed; many companies actually support a strong EU law, perhaps because they are painfully aware that a damaged reputation can lead to losses.

But some trade associations and individual companies were opposed to many elements on the table, and as the new report Inside Job from Corporate Europe Observatory and Friends of the Earth Europe makes clear, some industry voices pulled out all the stops to dilute and delay the proposal as much as possible.

Hundreds of pages released under freedom of information rules reveal the strategies employed by corporate lobbies across the EU, including from Denmark, Sweden, France, and Germany.

Particularly significant was how the Danish government worked closely with Danish business interests while the CSDD file was being prepared, with both targeting allies at the EU level to try to scupper elements of the file.

When Danish industry realised the depth of the ambition of the commission in the shape of the lead department on the file, DG Justice, it decided to target an entirely different part of the commission: the Regulatory Scrutiny Board (RSB).

Secretive body

You can be excused for never having heard of the RSB.

It is a secretive body, acting behind closed doors, made-up of only a handful of appointed officials who have extraordinary powers to scrutinise legislation to see if it is 'fit' for purpose.

The RSB is the embodiment of the commission's deregulation agenda and it is evidence that the commission has fallen hook, line, and sinker for the arguments of big business. These seek to conflate rules and regulations with so-called 'red tape' and to rebrand regulations as 'burdens' on business which should be scrapped.

And the RSB has the power to reject new commission proposals, with only the commission's highest body — the College of Commissioners — able to override its veto.

The RSB's own rules say that it is not supposed to discuss individual files in meetings with lobbyists, but the evidence in our report reveals a major loophole in those rules: they can be — and are — lobbied in writing.

Indeed, released documents indicate that the RSB took "good note" of industry concerns. Evidence in the report raises other concerns too. On paper, the RSB is supposed to include economic, social, and environmental expertise, but almost all members only have economics or business administration backgrounds.

And it seems to operate largely among like-minded organisations; more than 90 percent of external meetings held by the RSB chairpersons have been with corporate interests or think tanks supportive of its work and mandate.

It's not surprising, then, that the RSB rejected the commission's reports not once but twice.

And these two rejections forced a major rethink of the proposal. Pro-industry voices within the commission were brought in to help 'steer' the file, external lobbyists were given more ammunition and time to defeat the original proposals, and particular elements that some business groups had fought against were ultimately removed.

The RSB acted in accordance with its mandate, to put a spanner in the works of proposed legislation that might harm business competitiveness. Spare a thought for the environmental and human consequences of what is, quite frankly, an inside job.

Looking forward, the RSB and the deregulatory agenda that it represents needs a major overhaul.

The commission must drop its myopic view of regulation. Its focus is almost always to minimise so-called burdens on companies. But there are other concerns we need to take much more seriously. Regulation needs to be reclaimed as a vital tool to achieve social, environmental, and equality objectives.

And the European Parliament and member states must urgently take steps to ensure that the CSDD proposal recovers its original ambition to hold businesses to account for abuses in their supply chain.

European companies have been linked to human rights atrocities and environmental disasters across the globe for decades. These together with the climate emergency make this mission an urgent one.

Author bio

Vicky Cann and Kenneth Haar are researchers at Corporate Europe Observatory, a NGO monitoring corporate lobbying of Brussels policy-making.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

This 'Black Friday' is a turning point in corporate accountability

Much supply-chain abuse remains hidden from plain sight – not only to consumers but to the companies themselves, who have built increasingly longer, more complicated, and more opaque supply chains, which have become harder to monitor, control and account for.

Why the EU delay on supply chains? Corporate lobbying

EU legislation to clean up supply chains and corporate governance has been delayed after fierce industry lobbying. Voluntary commitments have repeatedly failed, now it is time for decisive regulatory action.

EU corporate due diligence: new rules, or businesses rule?

The Brussels rumour mill has it that the EU Commission is being pressured to put forward a weaker proposal than what civil society organisations, trade unions, and the European Economic and Social Committee say is needed.

EU seeks crisis powers to take control over supply chains

The Single Market Emergency Instrument (SMEI) introduces a staged, step-by-step, approach — providing emergency powers to the EU Commission to tackle any potential threat which could trigger disruptions or shortages of key products within the EU.

How US tech giants play EU states off against each other

Some have tried to justify Big Tech's meagre tax payments in EU states with heavier tax burdens by emphasising the fact that these companies create jobs and invest in next-generation technologies. However, their market dominance comes at a steep cost.

Column

EU should admonish less, and listen more, to the Global South

Whether on Russia, or gas, or climate change, or food security, the EU's constant finger-wagging and moralising is becoming unbearably repetitive and self-defeating. Most countries in the Global South view it as eurocentric and neo-colonial.

News in Brief

  1. EU takes Malta to court over golden passports
  2. EU to ban Russian products worth €7bn a year more
  3. Denmark: CIA did not warn of Nord Stream attack
  4. Drone sightings in the North Sea 'occurred over months'
  5. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  6. New compromise over EU energy emergency measures
  7. 15 states push for EU-wide gas price cap
  8. EU: Nord Stream explosions 'result of a deliberate act'

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Everything you need to know about the EU gas price cap plan
  2. Why northeast Italy traded in League for Brothers of Italy
  3. How US tech giants play EU states off against each other
  4. Deregulation of new GMO crops: science or business?
  5. The European shipping giants plying Putin's fossil-fuels trade
  6. Russian ideologue and caviar on latest EU blacklist
  7. Netherlands tops EU social safety net for the poor
  8. New EU rules to make companies liable for their AI failures

Join EUobserver

Support quality EU news

Join us