In the ongoing process of a new EU directive for increased corporate responsibility for human rights and the environment, Sweden has become one of the member states that risks overturning the entire legislation. Sweden must vote yes to the law to ensure that companies are held responsible for their impact on people and the environment throughout the supply chain. This is written by Ebba Eriksson, project associate at Fair Action.
Companies' responsibility for human rights and the environment is currently governed by international guidelines and guiding principles, from for example the UN, ILO and OECD, as well as the national legislation of individual countries. However, merely guiding and establishing guidelines has proven ineffective against the companies' continued crimes. Around the world today, forced labor, child labor, gender-based violence and harassment, insufficient wages that cannot be lived on, and obstacles to organizing trade unions occur, among other things. The companies also contribute to fossil emissions and environmental destruction, through, for example, the use of dangerous chemicals and the dumping of harmful waste in nature.
In light of this, the EU Commission has been working on a new EU directive for the past three years that more clearly establishes and more strictly regulates companies' responsibility for human rights and the environment. At the end of 2023, the European Parliament and EU member states adopted the new directive - Corporate Sustainability Due Diligence Directive (CSDDD), which in Swedish is called Sustainability Due Diligence Directive for Businesses. What then appeared to be a formal and quick vote regarding the approval of the legislation, has now i Instead, it has become a protracted process where the vote has been postponed several times since February. Country after country has expressed uncertainty and mistrust about approving the CSDDD, and since a majority of member states' votes are needed to pass the directive, it is now at risk of being completely overturned. The impending EU elections in June also make time short to achieve both a majority vote and an official adoption by the current European Parliament. A newly elected parliament brings with it uncertainties regarding future negotiations and adoptions of the CSDDD.
Only Sweden votes no
While other uncertain countries wanted to abstain from voting, is Sweden is the only country who clearly communicated their intention to vote no to the bill. Minister of Energy and Food Ebba Busch (KD) argues for Sweden's position based on the view that the directive would entail an unmanageable administrative burden, which would particularly affect small businesses. Firstly, small and medium-sized enterprises (SMEs) are not covered by the directive, but the legal requirement only applies to large enterprises. In the ongoing negotiations between the voting rounds, it has also been suggested that the companies to be covered should be even larger than what was first presented. Secondly, mapping, follow-up and reporting are already included in due diligence guidelines from the UN and OECD, which many companies already work on and CSDDD is based on. The fact that companies will now be required by law to carry out these steps in the entire supply chain, from production to suppliers and subcontractors, should be regarded as a positive and expanded opportunity to be able to identify and counter violations of human rights and the environment at all stages of the supply chain.
The benefits of due diligence are many; it is the moral right to respect human rights and the environment; internal and external transparency increases; the relationship between companies and suppliers improves; you live up to increased expectations from customers and employees who care about human rights and environmental issues; the company's image and reputation are improved if one takes responsibility and works for improved supply chains.
An important argument for CSDDD, put forward by German companies in response to Germany expressing uncertainty about the directive, is that the legal requirement would level and make the "playing field" more equal for companies. If all companies follow the same directive, the risk of responsible companies being out-competed because their due diligence processes are considered cumbersome and resource-intensive is reduced. It also reduces the risk of workers and the environment being harmed by price-pressing competitive methods.
Requested directive
CSDDD is long awaited and welcomed by both large Swedish companies, such as Ikea, Volvo Cars and Ericsson, which trade union and civil society. That Sweden plans to vote no to the directive thus goes against the broad support that exists among business and social actors, and deprives those who longed for increased corporate responsibility and fairer supply chains of the opportunity to get legal backing for a fairer transition.
For Fair Action, which works for a just transition through the EU-funded project "DEAR - fashioning a just transition" which partly focuses on the rights of textile workers in clothing factories, an important and long-awaited aspect of the directive is the expanded possibility of compensation for the workers in the countries of production. The establishment of grievance mechanisms will make it easier for workers to report violations and the CSDDD establishes the worker's right to have their case heard in a civil court.
Fair Action calls on the Swedish government to consider the benefits of CSDDD and the broad support The directive has among major Swedish actors in both business and civil society. The right thing is to stand up for human rights and environmental protection and vote for CSDDD.
This is a debate article. The author is responsible for analysis and opinions in the text.
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