EU Updates - May & June
The European Elections 2024
No matter how optimistic one can be, there is no denying that today Europe is facing a complex historical period. We have been witnessing climate and biodiversity crises, dreadful wars, disruptive innovations, and increasing societal inequalities, all of which impact our daily lives and contribute to creating a climate of tension and uneasiness.
In this context of uncertainty and polarization, the upcoming European elections, taking place from 6 to 9 June 2024, will constitute a pivotal moment for the future of our continent.
The new formation of the European Parliament will influence the Commission’s agenda and decisions, effectively shaping the political framework of the next five years.
In anticipation of this crucial event, CSR Europe has developed the Business Manifesto 2024-2029, a document that advocates for a just industrial transition that leaves no one behind. We believe that this is an essential condition to achieve the goal of a sustainable Europe by 2030.
The Manifesto, conveying the perspectives of CSR Europe members, has been and will be addressed to current and future policymakers at both European and national levels, to inform their choices and suggest useful approaches for an inclusive, sustainable future.
CSR Europe strives to maintain the ambition of net zero greenhouse gas emissions and urges efforts for enhanced respect of human dignity, as the transition is an opportunity to strengthen Europe’s resilience, competitiveness, and inclusiveness. For this, we need a European Industrial Deal that establishes a stronger business case for a sustainability transformation and collaborative action.
Now more than ever, it is our political and moral duty to cooperate and advance relentlessly toward peace and prosperity, together.
For more information:
European Parliament Approves the Corporate Sustainability Due Diligence Directive
On April 24, the European Parliament officially approved the Corporate Sustainability Due Diligence Directive (CS3D), which compels companies to actively manage and reduce their adverse impacts on human rights and the environment. The directive passed with a majority of 374 votes in favor, 235 against, and 19 abstentions, reflecting a robust endorsement of its objectives.
OVERVIEW OF THE DIRECTIVE
The new directive mandates that both EU companies and non-EU firms operating within the EU, including those involved in franchising or licensing, adhere to stringent due diligence requirements. This involves the entire spectrum of their operations, from supply and production to distribution, ensuring they tackle issues like slavery, child labor, labor exploitation, biodiversity loss, pollution, and the destruction of natural heritage.
SCOPE AND APPLICABILITY
The rules target larger enterprises, specifically:
EU companies and their parent companies with over 1,000 employees and a global turnover exceeding 450 million euros.
Companies with franchising or licensing agreements in the EU that maintain a common corporate identity and have a worldwide turnover above 80 million euros, with at least 22.5 million euros derived from royalties within the EU.
Non-EU entities meeting these criteria are also subject to the directive. These companies are required to integrate due diligence into their operational policies, secure contractual assurances from partners, revise their business plans, and support smaller affiliates in meeting these new standards.
IMPLEMENTATION AND ENFORCEMENT
Companies are also tasked with developing transition plans to align their business models with the global warming limit of 1.5°C set by the Paris Agreement. Member states will support this transition by providing detailed online resources about due diligence obligations and national supervisory authorities will enforce compliance, with the authority to impose fines up to 5% of the offending company's global turnover and to "name and shame" non-compliant firms.
FUTURE STEPS
Following this pivotal vote, the directive requires formal endorsement by the Council, after which it will be signed and published in the EU Official Journal, coming into effect 20 days later. Member states will then have two years to incorporate the directive into national law.
The enforcement of these rules will phase in gradually:
Starting in 2027 for companies with over 5,000 employees and a global turnover above 1.5 million euros.
In 2028, it will apply to firms with over 3,000 employees and 900 million euros in global turnover.
By 2029, all remaining applicable companies will need to comply.
1. Entry into application of the directive according to the dimension of the company
This directive represents a significant advance in corporate accountability, ensuring that large companies operating within the EU take responsibility for their environmental footprint and human rights impacts.
CSR EUROPE EU MASTERCLASS
For further insights into CS3D and value chains, companies can join our upcoming EU Masterclass “Value Chain Transparency and Traceability in the Forced Labour and Deforestation Regulations,” scheduled for May 16th.
Moreover, CSR Europe Corporate Members can access the replay of the first EU Masterclass “CS3D & Value Chain Reporting”, held on March 21st, in the exclusive Members-Only area. NPOs can obtain the recording by reaching out to Daria Delnevo at dd@cseurope.org.
For more information:
Contact Morris Massarutto
Get Ready for the EU Diversity Month 2024
On 25 April, the European Commission held a high-level event to officially kick-off the European Diversity Month 2024.
This year’s European Diversity Month celebrates the efforts made by organisations to create fair and inclusive environments for the benefit of all. Diversity and inclusion are indispensable values for fostering innovation but also for cultivating a resilient workplace prepared to navigate:
The complexities of the digital age
Pressing environmental needs
The unique needs and strengths of an aging workforce
Companies interested in finding out how well they manage diversity can use the Diversity Self-Assessment Tool to see if they are a Diversity Champion, Pioneer, Explorer or Beginner and to begin to explore how they might make further progress on this journey.
For more information:
The Forced Labour Regulation has Become a Reality
On Monday 22nd April, the European Parliament plenary approved the adoption of a wide-reaching legislation aimed at preventing the import and trade of goods produced through forced labour, with 555 votes in favour out of 696.
This is a historical moment for the EU, taking a stance and resolutely fighting the practice of forced labour in supply chains - something that anti-slavery associations had been waiting for years.
The law is now expected to come into force in the time of two years and is designed to go together with the Corporate Sustainability Due Diligence Directive (CS3D). With these legislations, the European Union is sending a clear message to the workers and setting a powerful precedent for other countries.
The Forced Labour Regulation is foremost projected to safeguard workers' rights and to stop the profits generated from human rights abuses, and it will also have the side effect of assuring customers about ethically sourced goods. The scope is global: companies headquartered both within and outside the EU will be affected, including online marketplaces.
Despite missing some critical provisions proposed during negotiations, the final text of the law is still very impactful. Notably, an extensive sanctions system has been established, and it includes an import ban, an export ban, and the withdrawal from the EU market for all products made through forced labour worldwide.
For a correct implementation of the instrument, now, serious engagement and coordination between the EU and third countries become essential. The victims of forced labour must also be able to easily access remedies for harm, so a clear framework must be established.
All in all, the Forced Labour Regulation is undoubtedly a crucial milestone for the EU and the eradication of slavery to be applauded and celebrated, but also thoroughly understood.
If your business is interested in comprehending this new wave of policy obligations and strategizing effective compliance measures, join us for our next EU Masterclass, “Value Chain Transparency and Traceability in the Forced Labour and Deforestation Regulations”.
The event will be held online on May 16th and will be a major opportunity for companies to gain insight into the key contents of the legislation, navigate the value chain requirements, and learn practical compliance strategies. Register here!
For more information:
Much More Than a Market: a Glance at Letta’s Report
Last year, the European Commission and national governments tasked former Italian prime minister Enrico Letta to write a report on the European single market. The ultimate goal was to make Europe fall in love with the project, a mission that Jacques Delors himself – to whom the report is dedicated – notoriously declared impossible.
Only a minority of European businesses and citizens today benefit from the advantages of the internal market, explains Letta, whereas in China or the US, economic players invest their entire market. “This weakness has repercussions on growth and partly explains why the EU has fallen behind the US and China”, the former prime minister told Le Monde during an interview.
For eight months, then, Letta traveled across Europe, engaging with heads of state, intellectuals, business leaders, and civil society representatives alike. On Thursday 18 April, he finally presented the result of his work to the EU27, titled “Much More Than a Market”.
In the 147-page report, the former prime minister explains that he wanted to pick up exactly from where Delors had stopped, that is, including the sectors of energy, telecoms, and finance in the single market. One of the key priorities outlined is the reinforcement of the Energy Union, along with a general transformation of the European energy sector and infrastructure.
The report mentions many specific recommendations. Among them:
A vast expansion and fortification of Europe’s grids
A systematic review of EU security of gas supplies
Joint procurement actions by EU governments to secure critical raw materials
Cross-border auctions for additional renewable energy, to reduce costs and achieve efficiencies
Cross-border projects to be used to foster goodwill with reliable energy partners.
Letta also warns of “emerging dependencies on nuclear fuels”, and the risk of “sabotage or unauthorised data transfer” as concerns future clean technologies, for which he suggests implementing cybersecurity measures. While the report’s policy proposals imply a bolstered mutual trust among member states, Letta endorses national sovereignty, claiming that every country should retain the right to choose its energy mix.
This report is expected to have a significant impact on the EU's political orientation after the upcoming elections and could radically reshape the European energy sector. Letta also expressed his hope that the report will be considered by former chief of the ECB Mario Draghi for his own report on EU competitiveness – soon to be released. “There is a clear link: integrating the single market is fundamental to competitiveness” Letta pointed out.
Finally, for CSR Europe, the competitiveness of European businesses is essential in ensuring that no one is left behind. Discover more about our Business Manifesto 2024-2029!
For more information:
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