Oireachtas Joint and Select Committees
Wednesday, 18 June 2025
Committee on Enterprise, Tourism and Employment
Scrutiny of EU Legislative Proposals
2:00 am
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Before we proceed, I have a few housekeeping matters to go through. I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses make to other persons in evidence. The evidence of a witness physically present or who gives evidence from within the parliamentary precincts is protected, pursuant to the Constitution and statute, by absolute privilege. Witnesses within the parliamentary precincts are protected by absolute privilege in respect of the presentations they make to the committee, which means they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Chair to ensure that this is the case. Therefore, if their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with any such direction.
Members of the European Parliament, MEPs, participating in this committee session from a jurisdiction outside the State will already have been advised that they should always be mindful of their domestic law and how it may apply to them giving evidence. The decision as to whether they take legal advice in respect of the evidence they propose to give should also be informed by this. A number of MEPs are giving evidence remotely from a place outside the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as witnesses physically present do. They have already been advised that it may be appropriate to take legal advice on this matter. They are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory regarding an identifiable person or entity, they may be directed to discontinue their remarks and it is imperative that they comply with any such direction.
I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate in a meeting where he or she is not adhering to this constitutional requirement. A member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member participating via MS Teams to confirm that he or she is on the ground of the Leinster House campus prior to making a contribution to the meeting.
Members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name, or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name or reputation of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with such a direction.
I propose that we publish the opening statements and submissions provided by witnesses on the committee's website. Is this agreed? Agreed. I suggest we invite our witness to speak for up to 10 minutes, or perhaps longer because we only have one witness, and that will allow all members to ask questions and make comments for round one of seven minutes, to start off. We will then see how it is going and we will see what time is needed to come in again. We will decide on the time for the second round depending on how many questions are asked and how it runs. Members may be called as they appear on week two of the speaking list. Members may speak more than once. Is this agreed? Agreed.
The committee decided to carry out scrutiny of the following EU legislative proposals; COM (2025) 80 and COM (2025) 81, covering the corporate sustainability reporting directive, CSRD, and the corporate sustainability due diligence directive, CSDDD, also referred to as the omnibus package. This is our second public meeting on this topic. The committee invited members of other relevant committees: the Joint Committee on Climate, Environment and Energy, the Joint Committee on European Union Affairs and the Joint Committee on Foreign Affairs and Trade. We have also invited members of the European Parliament elected from the constituencies in Ireland.
I welcome our witnesses here today, including the following officials from the Department of Enterprise, Tourism and Employment; Mr. Colm Forde, assistant secretary, commerce, consumer and competition division; Mr. Conor Verdon, principal officer, company law audit and accounting policy and legislation unit; and Mr. Colm O'Neill, assistant principal officer, company registration and regulation policy unit. I call on Mr. Forde to make his opening statement.
Mr. Colm Forde:
Good afternoon Cathaoirleach and members of the committee. I thank the committee for the opportunity to appear before it today to discuss the European Commission’s omnibus proposal on simplification and, in particular, its implications for the corporate sustainability due diligence directive and corporate sustainability reporting directive. I welcome the committee’s engagement on this important matter.
I am the assistant secretary in the Department’s commerce, consumer and competition division. I am accompanied this morning by my colleagues Mr. Conor Verdon and Mr. Colm O'Neill. Mr. Verdon is a principal officer in the Department’s company law audit and accounting policy and legislation unit, with responsibility for the corporate sustainability reporting directive, and Mr. O'Neill is an assistant principal officer in the Department’s company registration and regulation policy unit with responsibility for the corporate sustainability due diligence directive. Before we get into the substance of the omnibus proposal on sustainability, it is worthwhile to give some context to what has led the Commission to publish the omnibus proposals. There have been a variety of initiatives at EU level over the past two decades but the issue of disproportionate administrative burdens on business has remained a persistent challenge. Today, regulation is seen by more than 60% of EU companies as an obstacle to investment and 55% of SMEs across Europe say that regulatory obstacles and administrative burdens are their greatest challenge. There has been a significant step change at EU level with regard to simplification and burden reduction, following on from the Letta and Draghi reports in 2024. The importance of reform is being pushed strongly by the European Council, which last October called for a simplification revolution by ensuring a clear, simple and smart regulatory framework for businesses and reducing administrative, regulatory and reporting burdens, in particular for SMEs.
In March 2025, Council emphasised the need to simplify and drastically reduce, as a matter of urgency, administrative, regulatory and reporting burdens; called for streamlined EU legislation that fosters a clear, simple, and innovation-friendly regulatory framework; urged the European Commission and colegislators to adhere to better regulation principles and avoid over-regulation; and ensure that small and medium-sized enterprises are not disproportionately affected.
The Commission’s work programme for 2025 indicated the intention to bring forward a number of so-called omnibus packages and simplification proposals in the context of strengthening EU competitiveness. The first of these omnibus packages, omnibus I and II, was published on 26 February 2025 with the aim of balancing the EU’s ambition towards a sustainable transition with the enhancement of EU companies’ competitiveness. The package of proposals includes amendments to the corporate sustainability reporting directive, the corporate sustainability due diligence directive, the carbon border adjustment mechanism and the InvestEU regulation and is accompanied by a draft taxonomy delegated Act for public consultation. Further omnibus proposals have recently been published relating to the Common Agricultural Policy and for small, mid-cap companies. The Department of Enterprise, Tourism and Employment has responsibility for both the CSRD and CSDDD and I will go into some detail on the Commission’s proposals in relation to these directives.
The corporate sustainability reporting directive is the EU’s response to the global reframing of company reporting to include environmental, social and governance matters. It entered into force in January 2023 and arose from the European Green Deal and the EU action plan for financing sustainable growth. The aim of the CSRD is to harmonise the EU rules for sustainability reporting by companies, putting it on the same footing as financial reporting. It ensures that investors and other stakeholders have access to information to assess investment risks arising from climate change and other sustainability issues. While it is, in essence, a reporting directive, its impact aims to contribute to a more strategic and focused approach across companies on sustainability matters.
Ireland was among the first countries in the EU to transpose the CSRD and did so before the 6 July 2024 deadline. The European Commission’s webpage shows that infringement proceedings are pending against seventeen member states, due to the lack or delay of the notification of national transposition measures or their incompleteness. The on-time transposition of the directive into Irish law was welcomed by stakeholders, giving clarity and certainty to those obliged to prepare their first reports for the 2024 financial year, to be published this year. The CSDDD provides that in-scope companies must, for the first time, conduct risk-based human rights and environmental due diligence and integrate due diligence into all corporate policies and risk management systems.
The CSDDD was published in the Official Journal of the European Union on 5 July 2024 and gave member states until 26 July 2026 to transpose the directive into national law. The Department has undertaken substantial stakeholder engagement on both directives. When the CSRD entered into force on 5 January 2023, the Department held a stakeholder webinar to discuss the implementation of the directive. There were nearly 500 participants on the day with presentations from the European Financial Reporting Advisory Group, EFRAG, the Commission and the then Minister of State, Deputy Calleary. From feedback we received, we understand that the event was very well received by those attending.
The Department also launched a public consultation, which closed in March 2023, on the member state options in the CSRD, which received 34 detailed and substantive responses that were analysed and used to inform policy decisions. The Department again briefed stakeholders at a webinar on 4 July 2023, with more than 250 attendees, on the policy decisions made and published the policy paper on its website. The Department consulted with our own agency, the Irish Auditing and Accounting Supervisory Authority, IAASA, the Central Bank of Ireland and the other regulatory bodies under the Companies Act 2014 on the transposition of the CSRD. Post transposition, the Department continued to engage with stakeholders to disseminate information on the CSRD. In November 2024, the Department of Enterprise, Tourism and Employment, participated in the joint IAASA and Irish Accounting and Finance Association, IAFA, conference on sustainability in accounting education at Maynooth University and also in a panel discussion hosted by Trinity Business School, involving a range of stakeholders from industry and private practice.
Since the publication of the omnibus proposals, officials from the Department, both in Dublin and Brussels, have engaged with a range of stakeholders and received numerous submissions concerning the content and implications of the proposals. These include representations from civil society and business organisations. All submissions are welcome and reviewed. Officials have also presented to the Department's enterprise forum on the CSRD and CSDDD and, more recently, with the Department's responsible business forum on the proposed changes in the omnibus on sustainability.
The Department continues to engage with key stakeholders, providing updates and responding to queries via dedicated mailboxes: csrd@enterprise.gov.ieand csdd@enterprise.gov.ie.
The omnibus on sustainability has proposed a number of legislative changes to both the CSRD and CSDDD. There are two separate proposals contained in Omnibus I, the so-called "stop the clock" and "content" proposals. The stop the clock proposal, which will postpone reporting requirements for certain cohorts of companies under CSRD and extend the deadline for transposition of the CSDDD by one year to July 2027, has already been adopted by the colegislators, with the European Parliament voting in favour of adopting the stop the clock directive by an overwhelming majority, with 531 votes for, 69 against and 17 abstentions. The Department is working with the Office of the Parliamentary Counsel to transpose the stop the clock directive and is expected to achieve this very shortly, giving certainty to all of our stakeholders. The content directive provides for the more substantive changes to the directives.
There are a number of areas the committee has indicated that it has an interest in and I will briefly address some of them now before we get into more substantive discussions this afternoon. The proposed changes to the CSRD aim to focus the sustainability reporting obligations on the largest companies, which are more likely to have the biggest impacts on people and the environment. To do this, the Commission intends to remove approximately 80% of companies from the scope of the CSRD, restricting the application of the requirements to those companies having 1,000 or more employees, as opposed to 250 employees under the current law. The proposed changes aim to ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains through the introduction of the value chain cap. The value chain cap proposal is for companies that will not be within the scope of the CSRD anymore - up to 1,000 employees - whereby the Commission would adopt by delegated act a voluntary reporting standard, based on the standard for SMEs developed by the European Financial Reporting Advisory Group. That standard will act as a shield by limiting the information that companies or banks falling into the scope of the CSRD can obtain from companies in their value chains with fewer than 1,000 employees.
The changes to the CSDDD will significantly reduce the administrative burden on businesses without undermining the directive’s policy objectives. The proposals retain the directive’s risk-based approach and provide that, as a general rule, due diligence is limited to a company’s direct suppliers unless the company has information to suggest the possibility of adverse impacts at the level of indirect business partners. There is nothing to prevent companies from engaging with stakeholders such as NGOs and civil society that may have valuable information about adverse environmental or human rights impacts. For SMEs that are direct business partners of in-scope companies for both CSRD and CSDDD, the amount of information they are required to provide during due diligence mapping will be limited, especially for those with fewer than 500 employees.
It is important that businesses have guidance on these proposed measures. The Department maintains a dedicated CSRD page on its website, and this will continue to be updated and reviewed as changes are implemented. At EU level, the European Commission similarly maintains a highly comprehensive web page bringing together all of the appropriate guidance and resource materials from an EU perspective. To reduce the administrative burden on companies, the omnibus proposes that the European Commission will bring forward the date for the publication of general due diligence guidelines for the CSDDD to July 2026. With the first group of companies not due to report until July 2028, this two-year interval should provide companies with enough time to prepare.
The Minister for Enterprise, Tourism and Employment, Deputy Peter Burke, has been very clear that he is supportive in principle of initiatives to simplify the reporting requirements and reduce costs on companies, most especially SMEs. There is strong political will at EU level behind the omnibus proposals. The European Commission has voiced a strong ambition to have the proposed changes agreed quickly. The European Council has called on the Commission and colegislators to take work forward on the omnibus simplification packages as a matter of priority and with a high level of ambition with a view to finalising them as soon as possible in 2025.
The Minister has said that he supports the Commission’s proposed changes and their being agreed at the earliest opportunity to give business the legal certainty that it needs. The omnibus proposals have been discussed at a number of EU fora where member states, including Ireland, have given their opinion on them. This includes European Council summits, Competitiveness Council meetings in February and May, ECOFIN Council meetings this year, every COREPER II discussion since late February and at the Antici meetings, where the proposals are being discussed. Consideration of the proposed changes is ongoing at EU level and the Department is continuing to assess the implications as discussions progress.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I thank Mr. Forde. We will now have questions and comments from members. As agreed at our first meeting, as Deputy Paul Donnelly from Sinn Féin is not here, I call Senator Conor Murphy to take his place and then we will go straight back into it. Senator Mary Fitzpatrick will be second.
Conor Murphy (Sinn Fein)
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I thank Mr. Forde for the presentation. I know there is a lot to it and I am quite sure that many companies, particularly small- and medium-sized companies across the country, will welcome the fact of the reduction in regulation and the onerous burden of reporting on many of these matters.
I apologise, as I have to go on to another engagement. I wanted to ask one question on a particular issue. I read in Mr. Forde's presentation that the "CSDDD provides that in-scope companies must, for the first time, conduct risk-based human rights and environmental due diligence and integrate due diligence into all corporate policies and risk management systems." Has that taken place to date? Have companies and entities been obliged to do that at this stage, or is that in the process of being done?
Conor Murphy (Sinn Fein)
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What would be the considered timeframe for transposing this?
Conor Murphy (Sinn Fein)
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It would not take effect until July 2027.
Conor Murphy (Sinn Fein)
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Okay. There is a question I was going to ask on that, and it might require some speculation on the witnesses' behalf. One of the consultees was the Central Bank, and on the issue of the requirement, an Oireachtas committee has had the opportunity to listen to its presentation on what it considers its duty to facilitate the sale of Israeli war bonds across the European Union. Is there an implication with regard to that requirement here, in that it has to incorporate into corporate policies a due diligence to conduct human rights-based risk assessments? It might require some speculation from them, but in the witnesses' view, does that change the nature of the proposition that the Central Bank and the Government have put? Under the current European regulations, they feel they have no option but to facilitate that request to allow the proposition around Israeli war bonds.
Conor Murphy (Sinn Fein)
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I refer to companies being required to report on due diligence with respect to human rights risks. This particular area of work it is involved in is the subject of matters in the International Court of Justice, with a number of other nations bringing cases against Israel. There are clear views from many nation states in the European Union that what is happening in Palestine is a genocide and contrary to human rights. This new proposition, which will come into effect in two years, will not have any impact whatsoever on that. What is the purpose of having a requirement for due diligence in these matters if it is not going to have a purpose in regard to that?
Mr. Colm O'Neill:
I want to follow up on what Mr. Forde said there. There was a lot of debate on the proposal about whether financial undertakings in credit institutions should fall within the scope of the CSDDD. It was one of the points that was strongly debated at the trilogues between the European Parliament, Commission and Council. There was a compromise reached at the end of that proposal.
The compromise was that the downstream part of the chain of activities of regulated financial undertakings, in other words, getting the finished product to the end user, would not form part of the CSRD but the upstream financial undertakings are obliged to adhere to the due diligence requirements. I do not think I have fully answered the question but I have tried to do so in saying the upstream part of the due diligence process will apply to financial undertakings.
Conor Murphy (Sinn Fein)
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There is interest in due diligence with regard to some human rights aspects but not all. It appears to be a very European Union solution to this matter.
Mary Fitzpatrick (Fianna Fail)
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I thank the witnesses for joining us here today at the enterprise committee, for the very impressive and considerable work they have done, and for the comprehensive opening statement. I have been thinking about the omnibus and the work being undertaken. I am nominated by RGDATA to the industrial and commercial panel of the Seanad. My colleagues and I met recently with RGDATA's members, who are independent indigenous Irish retailers. They are our SMEs. I have been thinking about how the omnibus addresses them and how it will relieve the burden of regulation and red tape for them. The witnesses have mentioned some analysis being undertaken. Will they share with the committee the analysis being undertaken on how the reduction of burden of regulation and red tape will be manifest for small and medium enterprises in Ireland when this is ultimately transposed and in operation?
Mr. Colm Forde:
For context, I will refer back to the Draghi report I referenced in my opening speech. It referred to an excess of regulatory burden impacting on a company's ability to compete in the international marketplace, and most especially SMEs. It referred to the fact that in the period from 2019 to 2024 in the US approximately 5,000 laws were passed and in the EU 13,000 laws were passed. This was already on top of a high stock of regulation. On top of this, there is a sense there is duplication of regulatory functions between various areas of law. The consideration was that there is a disproportionate administrative burden on SMEs relative to larger companies. Throughout the European Commission this has fed into the proposal and the strong political drive to reduce the administrative burden by 25% for all companies and by 35% for SMEs. This is the context behind some of the proposals.
Allied to this, the Department is developing a national competitiveness and productivity plan. The first cost of business advisory forum met last week. It will also consider regulatory issues. There is a large combination of factors that will address the regulatory burden for all companies throughout the economy. It is difficult to identify the burden reduction of any individual legislation or regulation. With regard to CSDDD, originally the due diligence was going to run through the whole of the supply chain. The change being made is that due diligence will be in the first tier of the supply chain. Where there is awareness of information that necessitates further examination beyond the first tier, this will be done. This is a significant regulatory burden removed from companies in the supply chain. The companies in scope will not have to go further beyond the first tier unless there is evidence to suggest they should do so.
The big concern about CSRD is that originally when companies in scope would be completing their reporting obligations they would pass the reporting obligations down the supply chain and seek very detailed material from SMEs. This would be a disproportionate regulatory burden for those companies. What will now be introduced is a voluntary reporting standard. The Commission will publish this. Companies in scope will not be permitted to ask for any more information beyond what is in the voluntary reporting standard. This is an example of some of the ways in which the regulatory burden will be reduced on SMEs in the supply chain of companies. To go back to the first point I made in my opening statement, 55% or 60% of companies see the regulatory burden as our biggest challenge in doing business. The ambition is that companies should be able to focus the vast majority of their time on building their business, creating employment and enhancing productivity as opposed to being overly burdened by regulation. My colleagues may want to add specifics.
Mr. Colm O'Neill:
Mr. Forde has explained that the due diligence process will stop at tier one unless the company has plausible information to suggest the possibility or existence of adverse impacts for the due diligence. If there is no possibility or evidence of adverse effects further down, then the due diligence will stop at tier 1. This could relieve the trickle-down effect on SMEs.
The directive as published provides that companies have to evaluate the adequacy and implementation of their due diligence processes. At present in the directive it is down to one year and the proposal is to increase it to five years. If this proposal were accepted - it is still under discussion at present - it would limit the burden on SMEs, which often have to provide data to feed into the reports that large companies have to make.
Mr. Conor Verdon:
Regarding the CSRD, there will be two significant changes that will help SMEs. The original CSRD proposed that companies would come into scope in three successive waves, with the largest companies earliest and the third wave would be listed SMEs. The omnibus will remove SMEs altogether. SMEs will not be involved in their own right. The other change, which is possibly of greater impact, is that the larger company categories will be restricted to companies with more than 1,000 employees. Originally this figure was going to be 250 employees. As the larger companies will be removed, so will the SMEs who are part of their supply chain.
Tony McCormack (Offaly, Fianna Fail)
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I thank the witnesses for the opening statement. It is great to have the witnesses here. If we look at Europe, and the regulation and red tape we have, I hear from business and farming that we always seem to be the first country to implement whatever has been brought in, whereas other countries do not do so. I would like to know from the witnesses whether I am right in thinking that SMEs with up to 1,000 employees are exempt from this reporting unless something points to them whereby they need to report. How erroneous is self-reporting? What do we regard as an SME? Is it an enterprise with up to 2,000 or 5,000 employees? How many employees are we talking about?
Mr. Colm Forde:
The question of the timing of implementation is one that is raised. Part of Ireland's competitive advantage is that we have a stable and effective regulatory environment that is proportionate and that people can trust. A large part of the feedback we get from all stakeholders is that they ask us to give them consistency. When they have certainty, they can invest. Contrary to what Deputy McCormack has said, the view we have received from stakeholders is to implement the legislation as soon as possible so they know what they are dealing with and can plan appropriately. Delaying it means they are in a less certain environment and they cannot plan or invest appropriately. The feedback we get is that it gives us a competitive advantage if we are able to get the laws into place quickly rather than delaying or, as I mentioned earlier, potentially being in infringement proceedings with the European Commission, which is the case with a large number of countries for CSRD.
Regarding the obligation on SMEs, as my colleagues and I have outlined, the companies that are in scope are those with 1,000 or more employees. These companies have an obligation to go to their first tier of the supply chain to understand what impacts those first tier companies have. We mentioned earlier that there would be a template for reporting in terms of CSRD, which will limit the data points that the large companies in scope can ask of those SME cohort companies. Equally, for the CSDDD, there will be a limit on the amount of information that can be asked of SMEs, particularly for companies that have fewer than 500 employees.
Regarding the burden on SMEs the Deputy mentioned, another part of an omnibus proposal which is coming from the Commission is to introduce a new category of companies, called small mid-caps. At the moment, when we have different pieces of European regulation, there are proportionate levels of obligations, depending on whether the company is large or small. They are going to introduce a new tier of company called small mid-cap. These will have a reduced layer of reporting, relative to larger companies. There is an ambition to have a tiered and proportionate approach to regulatory burden, for this and other regulations. My colleagues may want to add specifically on both of those pieces.
Mr. Colm O'Neill:
I do not really have much to add. Mr. Forde has answered the question. With the CSDD, SMEs are outside the scope. As Mr. Forde explained, as part of the due diligence process, if an in-scope company has plausible information that there is the possibility of adverse impact, that may bring SMEs not necessarily within scope of the directive but they will have to be part of the due diligence process.
Also as Mr. Forde explained, there is a proposal that companies will not look for information from direct business partners with fewer than 500 employees.
Mr. Conor Verdon:
From the CSRD perspective, it was never going to apply to what we would call traditional SMEs. In the third wave, it was going to bring in SMEs that had securities listed on a market, which is a very small group of companies, we think only about 250 in Ireland. Under the omnibus proposals, even those SMEs will not be included at all.
Tony McCormack (Offaly, Fianna Fail)
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I thank Mr. Verdon. It gives some comfort that the smaller companies are not involved. Companies with 1,000 or more employees have the wherewithal to be able to look after the reporting and put together processes and procedures for recording this information and passing it on. It is similar for companies with 500 employees or more. I am delighted for the SMEs which are below the cap, that the reporting is not as onerous unless they are first-tier companies. As we all know, smaller companies are suffering at the moment. I am not talking about those with 500 employees but rather those with say, 100 employees. There is an awful lot of reporting back to Government agencies and various groups and organisations for them. That becomes very costly for them. We need to cut that cost and I am delighted to see that this European directive does not actually put them into it.
How will the Department support awareness training and technical readiness among the Irish companies that comply with the CSRD reporting standards?
Mr. Conor Verdon:
We have a number of initiatives. IAASA, which was mentioned previously, is our regulatory body for auditors and accountants. This organisation has a monthly round table on CSRD, which it holds with a group of professionals from the audit firms. These are the people who are actually doing the reporting. We also have a dedicated web page, as Mr. Forde mentioned earlier, which is available to business owners and to people engaged with the reporting. It has information on the technical standards as well, that is, the European sustainability reporting standards, ESRS, which are the standards used for the actual reports themselves.
Mr. Colm Forde:
Regarding the Deputy's question about supports for business, the White Paper on enterprise for our Department highlights that we are focused on the twin transitions of decarbonisation and digitisation. There are a number of supports for SMEs when it comes to decarbonisation. Enterprise Ireland has a range of supports aimed at helping companies to become more sustainable. These supports may help them to fulfil the requirements imposed by CSRD, for example, to comply with the voluntary reporting standards. Examples of EI supports available include the GreenPlus grant, which can be used for training to build environmental management capability and to implement environmental best practice, within a company. There is also the GreenStart grant which can be used to implement a structured environmental management and reporting system. We are very keen for companies to avail of those supports. The Department has developed a new national enterprise hub, where all supports are available to companies. They can go on there, see what the requirements are and see how they can avail of supports. It has been developed and designed to make it as user friendly as possible and to reduce the administrative burden. In this way, companies will be able to see the competitive advantages they can avail of by engaging with those schemes.
Tony McCormack (Offaly, Fianna Fail)
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I thank the witnesses. I might come back in with a couple of questions afterwards if we have time.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I everyone agrees, I suggest that we allow Ciaran Mullooly, MEP, to contribute. We did invite him in and he is a bit tight on time.
Mr. Ciaran Mullooly:
I thank the Leas-Chathaoirleach for the invitation to attend the meeting and extend my appreciation to the clerk and the committee members. It is not the first time I have been invited. Regrettably, due to a clash with a plenary two weeks ago in Strasbourg, I was not able to take part on the previous occasion. I am very pleased to be here today and I am particularly glad that the committee is dealing with these issues.
I have a question or two for the Department which I will put in a moment, after a brief introduction. Members will know that this process is part of a new process from the President of the European Commission, Ursula von der Leyen, entitled simplification, implementation and enforcement. Since I joined the European Parliament last year there have been a number of measures across various committees focused on issues such as this. I would describe them as generally being measures to try to ensure that the member states, businesses, enterprises, local authorities and regional groups will all be able to engage on a more simplified basis with the Commission. This is one of the big bugbears, as the committee members know. I am particularly conscious of it in Brussels and Strasbourg, because in recent months, chief executives from local authorities from throughout Ireland have been with us here in Brussels, speaking about the general process of funding, be it under regional development, employment or otherwise. The general consensus is that there is a significant problem with red tape and over-complicated procedures. I would go so far as to say that a number of the chief executives of local authorities have said to me that their advice to their staff is not to apply at all for European Union aid. That, to me, is an unacceptable position because it reflects very poorly on the level of complication that has come into the procedures. That is why I generally appreciate the efforts that have been made, not just in the area of enterprise, but in the general area of regional development, to improve the situation.
Regarding this legislation, I have been involved in a number of committees which have had an opportunity to comment on the legislation. Having listened today, I agree with many of the members' conclusions and I welcome the legislative proposal that intends to reduce the reporting burden for companies in the scope and limiting the trickle-down obligations on smaller companies, in particular. As the committee will know, it is expected that the process to approve a final legal text will take some time. This is still going on here. The last meeting I attended was still talking about reviewing the text involved. In the intervening period, I have been contacted by a number of enterprises, in Ireland and here in Brussels, with a view to teasing out a couple of issues.
One of the principal issues was mentioned by one of the previous speakers from the Department. This is the issue of mid-caps and the definition of this term, which has been chosen by the Commission.
Perhaps Mr. Forde from the Department would answer this question. Is he satisfied that there is a fixed definition for "mid-caps" in the legislation as it stands?
Mr. Colm Forde:
I will preface my remarks by saying that is a file we have not yet fully considered properly. I am not aware of a current definition of "small mid-caps" so the intention is to introduce a definition for small mid-caps to allow for a more tiered approach to reporting between large companies and SMEs. That is the position, as I understand it. I think that is it.
Mr. Ciaran Mullooly:
It is something that has come up on a number of occasions in meetings I have attended. We have been provided information by IBEC containing country-level breakdowns of mid-caps in Europe and the share of small and large mid-caps. There is some uncertainty, or perhaps a little uneasiness, about the reclassification of a number of companies and the follow-on implications. For instance, I have been contacted by some SME owners who asked whether going out of a particular category would, in turn, affect their ability to avail of support funding from the Department or Europe because they had been reclassified under a different area. In other words, is there a knock-on effect? I do not know if Mr. Forde has a view on that matter.
Mr. Colm Forde:
We are entering into speculation at this point because those issues have not been thought through. I can only say that the overriding principle, as I set out at the beginning, from both the Draghi report and the new Commission - the programme for Government and our Ministers have been very strong in this regard - and the ambition are to reduce the unnecessary regulatory burden while still remaining loyal to the core policy objective. It would not be consistent with that ambition if there were an enhanced regulatory burden on companies because they would then be classified as mid-caps. My take at the outset, without knowing the detail, is that large companies would be classified downwards to small mid-caps as opposed to SMEs being classified up to small mid-caps. I hope that is helpful.
In terms of these omnibus proposals, there are four files in the first omnibus and they apply across different Departments. It is difficult to have coherence when dealing with omnibus proposals. For example, the small mid-caps file is not one with which we in our Department will be dealing, from what I understand.
Mr. Ciaran Mullooly:
I understand that. Mr. Forde will forgive me if I ask the question and we can follow it up at a later point. I sit on committees and try to assess how the legislation will affect Irish companies, in particular. I have learned that the share of small and large mid-caps is particularly large in Germany, at 0.4% combined. That translates to a substantial contribution to turnover in the economy of 16% for small mid-caps and 24% for large mid-caps. I begin to think of an Irish equivalent and that is where I am concerned about how many companies will end up in each category at the end of the day and how many companies will leave one category and end up in another. It would mainly be for the good, I hope, in terms of regulation, but the long-term implications concern me.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Is Mr. Mullooly finished?
Mr. Ciaran Mullooly:
I will go back to the opening comment of the principal speaker, Mario Draghi. His contribution since I joined has been significant. Prior to joining the European Parliament, like many of those in the committee room, I am sure, I always blamed Mr. Draghi as the man who repeatedly put up the cost of my mortgage repayments in Ireland in his former role as an ECB announcer. I must say, his impact here has been strong. His words, in particular with regard to the performance of industry as compared to the East and, particularly, the rest of the West, are significant. I have a feeling and hope that we will be coming back with further legislation from Europe in this regard to make us more competitive, and not just in the area of enterprise. One of Mr. Draghi's most significant contributions was his comment on the price of energy in Europe. I appreciate that it is a debate for another day.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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We appreciate Mr. Mullooly taking time out of his busy schedule. We have no doubt but that we will be in contact with him during the coming year. I call Deputy Gogarty.
Paul Gogarty (Dublin Mid West, Independent)
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I apologise for leaving the room but I had to ask a question on promised legislation in the Dáil Chamber. I read the opening statements in advance and was in full attendance at the meeting last week, when representatives of the Irish Coalition for Business and Human Rights and IBEC attended. In that context, I have a couple of questions.
I previously made the observation that Ursula von der Leyen may have been watering things down as part of consensus building, what with the changed direction of the make-up of the new European Parliament. When the coalition made its presentation, it quoted the previous Minister of State with responsibility for directives, Deputy Calleary, who laid out the Government's support when he said:
I have been seeking to ensure that the proposal has ambition while striking the right balance of providing effective protections for stakeholders and ensuring that the measures to be implemented by companies are clear, proportionate, and enforceable.
That is kind of like motherhood and apple pie. No one could have a problem with it. However, the devil is in the detail in this context. I have asked parliamentary questions but have not yet got responses. I will be interested in the response of the witnesses. Why has Ireland not yet publicly aligned with like-minded member states, such as Spain, Denmark, Finland and Latvia, in defending the human rights and environmental protections in the directions? Given there is only a small enough window, how does the Government intend to use the negotiating period to ensure these elements are not weakened beyond repair before negotiations commence? For CSDDD and the omnibus COM (2025) 80 and COM (2025) 81, what specific steps has the Government taken, or plans to take, at Council level to ensure that, while we get the balance right, a risk-based approach to supply chain due diligence is at the core of the directive? We do not have the minutes of meetings and some matters are confidential, but what have the Minister and the officials said, or what will they say, about retaining the due diligence approach?
In respect of our climate transition plans, how will reporting without a legal requirement for full implementation ensure that we meet our international obligations on climate action? If everything is watered down so much, we cannot double check and, therefore, it is not worth the paper it is written on. I would welcome any comments from our witnesses on the issue.
Mr. Colm Forde:
The Deputy is right to say that the discussions at the Antici subgroup are confidential. That is the case. As I outlined in my opening speech, the Minister and Department have been vocal on this omnibus proposal at several forums, including ECOFIN, COMPET and the COREPER group. There are numerous strata at which this omnibus has been debated. The quote from the then Minister of State, Deputy Calleary, outlines what has been the overriding principle, that is, to protect the original ambition of CSDDD while trying to reduce unnecessary administrative burden. We have already touched on some of those issues.
The Deputy referred to risk-based assessments. From reading the transcript and watching the debate last week, there may have been an impression that there were going to be no risk-based assessments or due diligence anymore. Those elements will still be comprehensive. The company in scope must carry out due diligence on all its own operations. It must carry out due diligence on all of its first-tier supply chain companies and their operations. Companies must make information sources, such as email addresses, available so people can make them aware of plausible information. Where they are made aware of plausible information, they must act on other areas of the supply chain if they become aware of issues that require due diligence. It is still quite comprehensive. I hope that addresses the Deputy's question. My colleagues may have another view.
On the climate transition plans, we should not lose sight of the fact that there are lots of regulatory requirements on companies, not just the CSDDD. Within Ireland, the enterprise sector has an obligation to reduce by 35% its carbon emissions under the State's climate action plan. We are working closely with our enterprise base, including Enterprise Ireland and the IDA, to try to achieve that. Significant grants have been made available to companies to decarbonise their operations. I would not look at CSDDD in isolation from other requirements and obligations at a national level that we are working on closely with companies.
Earlier, I mentioned the twin transition of decarbonisation and digitisation. There are many different tools for Ireland to achieve its carbon reduction ambitions.
Mr. Colm O'Neill:
On the risk-based approach, what is not proposed to be changed in the Commission's proposal - and this is still in the published directive - is Article 5, which states, "Member States shall ensure that companies conduct risk-based human rights and environmental due diligence". That risk basis is clearly set there.
Paul Gogarty (Dublin Mid West, Independent)
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How far down the chain?
Mr. Colm O'Neill:
It is exactly as Mr. Forde explained. The risk-based approach is at tier 1 in general, but then there is a big "unless", which is that if there is potential for or evidence of adverse effects at the level of indirect business partners. I take the points that the Deputy is making, but it is clear in Article 5 that the risk-based approach is still front and centre.
Eoin Hayes (Dublin Bay South, Social Democrats)
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I thank the witnesses for their contributions, expertise, time and engagement on this. I envy them their knowledge of this area and their depth of understanding of what is happening. I have some commentary more generally on the approach and what the Minister and the Department are saying. However, my time would probably better used asking questions. I will ask all the questions and the witnesses can then respond.
One of the topics of discussion last week was on the role of financial institutions and the exclusion in that regard. Is there any sustainability reporting at all required of financial institutions in any of these proposals? If not, do the Minister or the Department have a view on that? Mr. Forde stated that 60% of EU companies see regulation as an obstacle to investment. I am curious to what the definition of "regulation" is for those companies or what the source of the information is. How are we categorising those EU companies? Are they operating in Ireland or elsewhere? I am conscious that regulation can be expanded in a wide variety of ways.
Is there a policy from the Department or the Minister regarding how climate regulation should be watered down? There is a legitimate question on harmonisation and simplification of regulation for businesses. That is a fair matter to explore. However, there is a tension in the context of the climate context and climate transition. How do we manage that tension? What is the Department's thinking on the matter?
The other issue that came up at our previous meeting was the enforcement mechanisms within this legislation. My understanding is that it is mostly in the civil area. Notably, in Ireland, civil action on enforcement mechanisms for legislation is not something that is often pursued or successful. Is there a view from the Department on how that would be implemented in Ireland vis-à-vis other European jurisdictions?
Has the Department done any analysis on the creation of jobs in the context of this additional regulation? I am conscious that auditing and accounting firms that might be hiring people who specialise in this area. On a matter that arose in the witnesses' contributions, I am concerned that publicly listed companies in Ireland would not have to report on this. From an investor transparency perspective, if we are asking only companies with more than 1,000 employees to meet sustainability reporting requirements or human rights-based reporting requirements and not asking this of companies that operate in public markets or that are listed on stock exchanges, there is a strange dissonance. I wish to understand that more. Are there any plans to do that from a public markets perspective. I again thank the witnesses for their time.
Mr. Colm Forde:
I am going to answer as many of those questions as possible and ask my colleagues to go further.
On the enforcement aspect, as Mr. O'Neill outlined earlier, the fact is with the transposition deadlines we are just not at that point yet of considering that transposition. There will be a public consultation in due course to consider those issues for national implementation.
Regarding the creation of jobs, it is not something that we would have analysed. I am conscious that with CRSD and CSDDD that there would have been firms, as the Deputy mentioned, offering guidance and advice. The feedback from industry shows that the big concern among companies was that complying with original proposals of the original directives was going to impose a significant financial burden on them in terms of availing of advisory support to meet their obligations. That is why the focus of the omnibus is to remove those obligations from the supply chain, particularly for SMEs.
The Deputy asked for the source of the figure of 60%. I do not have that to hand. I imagine it is from the Draghi report, but I am happy to follow up on it.
On the publicly listed companies, all I can say is that if they are publicly listed, I would have thought that they are highly likely to be in the supply chain of the large companies that are due to report. If they are in tier 1, they will have to provide certain information to those companies.
On decarbonisation and digitisation and the twin transition I mentioned, I have already referenced the fact that we have considerable supports available through Enterprise Ireland and IDA Ireland. Last week, the Department published research from Amárach Research on SME sustainability. We wanted to get a sense from our SME cohort about how important sustainability is for them. We found that: one in four businesses surveyed in the State is already being impacted by climate change; three in five reported that they understand the importance of sustainability to their businesses or have a very good understanding of it; and four in five of the business surveyed stated that sustainability is important to their business on a day-to-day basis. The latter rises to nine in ten for more established businesses with a turnover of over €1 million. That is much lower down than the benchmark for these directives. Making a positive difference was the top-ranking reason for why businesses are motivated to become sustainable, at 32%, followed closely by saving money, at 29%, something the organisation believed in, at 23%, operational efficiency, at 21%, and regulatory compliance at 20%. Regulatory compliance is not the sole or the top reason why companies want to get on the sustainability journey. A clear majority of businesses surveyed believe that strong compliance with sustainability will be important. Just over one in the organisations surveyed has written sustainability strategy in place. The figure stands at one in four in the context of micro and small firms.
Now we have that snapshot in time, it is something that we want to follow up on in due course to see whether the trends shift. That will inform the supports that we provide to our enterprise agencies and companies to help them on that sustainability journey. I will ask my colleague Mr. O'Neill to address some of the other issues that I may have missed.
Mr. Colm O'Neill:
Mr. Forde hit most of the points there. On the review of financial undertakings in the context of whether they should be included or excluded, during the negotiations on the directive there was a lot of debate on whether the financial institutions, such as credit institutions, investment funds and insurance companies, should be included within the scope of the CSDDD. It was strongly debated during the trilogues between the Commission, the Council and the European Parliament. What came out of those trilogues was a compromise to the effect that financial undertakings are not completely outside of the remit, so the downstream part of the chain of activities or financial undertakings-----
Eoin Hayes (Dublin Bay South, Social Democrats)
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I am sorry to interrupt Mr. O'Neill, but I do not have that much time. Can he outline what he means by downstream and upstream? Mr. O'Neill referenced this earlier and I am not entirely sure.
Eoin Hayes (Dublin Bay South, Social Democrats)
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So a financial institution or intermediary intervention in the creation of the product versus the distribution of the product.
Rose Conway-Walsh (Mayo, Sinn Fein)
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My first question relates to the European Commission and what it stated in its promotion of legislation, namely:
Reports [from companies] often omit information that investors and other stakeholders think is important. Reported information can be hard to compare from company to company, and users of the information are often unsure [of what] they can trust [in] it.
[...]
High quality and reliable public reporting by companies will help create a culture of greater public accountability.
The witnesses will agree that the latter is hugely important.
Earlier, Mr. Forde, stated that the CSRD:
... ensures that investors and other stakeholders have access to information to assess investment risks arising from climate change and other sustainability issues. While it is, in essence, a reporting directive, its impact aims to contribute to a more strategic and focused approach across companies on sustainability matters.
Would Mr. Forde say that the reason for the stop-the-clock proposal relating to the directive is to minimise the risk to investors rather than to relieve the regulatory burden on companies?
Mr. Colm Forde:
With regard to the purpose, much of the feedback from the industry was that the stop-the-clock directive was very challenging to comply with and that it represented a completely different departure to have the required level of non-financial reporting. We are obviously all very used to financial reporting. The ask was for a delay to allow companies to develop their systems and understand how they were going to comply.
I will defer to my colleague Mr. Verdon on the benefit of common standards across Europe. If there is no provision for common standards, people can claim certain things in their annual reports that are not subject to standardisation among regulators. We see that regarding consumer products and everything else but we are trying to introduce a level of consistency. When people are making sustainability and green claims, it is a case of ensuring they are properly supported and substantiated.
Mr. Conor Verdon:
I agree with Mr. Forde. The main reason for the stop-the-clock directive was a proposed change to the original directive. There are different waves of companies. The second wave, which were coming into scope this year, were essentially being asked to gather all the data and prepare a report that was going to be on the basis of law that is to change by the end of the year.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I have a question on that. If the changes were not being brought in, we would not have the stop-the-clock directive. Have we any information on how many companies have already complied with all the obligations?
Mr. Conor Verdon:
The only companies reporting this year on what happened last year are the wave 1 companies, which are public interest companies that have more than 500 employees. This goes back to Deputy Hayes’s question. The public interest entities would include insurance undertakings, credit institutions and those with equity listings on the Stock Exchange here. I am aware of the numbers in that category because they supervise the audits of public interest entities. There are 21 companies in that category at the moment. On the companies that were possibly due to come into scope and that are now going to be subject to deferral under the stop-the-clock directive, it is much harder to have exact numbers on those because of the criteria.
Rose Conway-Walsh (Mayo, Sinn Fein)
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What I am trying to get at in my limited time is if we have companies that are already adhering to all the criteria, it seems to be unfair to sweep the boards with all of what is proposed. I do not believe I ever met anybody who would be in any way not supportive of the streamlining of reporting, but let us be absolutely clear: some of the reporting required of companies, whether small or foreign direct investors and whether the reporting is because of bureaucracy or the need to produce duplicates, is nonsensical. Everybody would welcome the changes in this regard but obviously there is concern, particularly around the detrimental effect the proposed changes may have on environmental reporting and workers’ rights. It is about trying to strike a balance between these. I have major concerns around how this is being done and the way the current climate is being used, under the simplification umbrella, to erode regulations that need to be in place across member states.
The witnesses referred to overregulation. Who defines that? I envisage many things being contested here. How would the voluntary standard be implemented? What is the likelihood of companies adhering to the voluntary standards that are talked about?
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I ask the witnesses to be brief with the answers because we are running out of time.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Does the Department have any powers of enforcement over those who do not adhere to the voluntary standards?
Mr. Colm Forde:
The purpose of the voluntary standards is such that companies in scope cannot ask for any information above and beyond that in the voluntary standards. The voluntary standards are just for the SME cohort. The concern was that the companies in scope would just pass on the reporting obligations down the supply chain and ask for huge amounts of data from SMEs, which would find it overwhelming. The purpose of the voluntary standards is to say to the companies in scope that they are not allowed to ask for data above and beyond what is in the voluntary standards. I do not know whether that addresses the Deputy’s question.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I am aware that it is an important question but time is tight.
Rose Conway-Walsh (Mayo, Sinn Fein)
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It really is important because I do not feel we have teased out in the way we need to the burden that will be on the State if the companies do not adhere to what they need to adhere to or fail to implement what is required.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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With respect, the Deputy may contribute again in her closing remarks. I will give her time to do so later.
Ollie Crowe (Fianna Fail)
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I thank our guests for the presentation and information they gave us. With regard to the corporate sustainability reporting directive, how does the Department intend to support businesses, particularly SMEs, in handling the additional administrative burden it will impose?
Mr. Colm Forde:
We have had numerous webinars and a dedicated webpage giving all the details. The European Commission has a dedicated webpage with considerable information. As I said to Deputy Rose Conway-Walsh, the Commission will be publishing the voluntary reporting standards. These will be standardised. I also referred to the supports of Enterprise Ireland and the local enterprise offices that companies can avail of to develop systems for reporting. My colleague Mr. Verdon might have something to add.
Ollie Crowe (Fianna Fail)
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There was some concern that the omnibus proposals will remove the obligation on larger companies to assist smaller business partners in reporting under the CSRD. Does the Department have a view on this?
Mr. Colm Forde:
I am not aware that there is any change in the CSRD regarding assistance from larger companies. Several panel discussions have been hosted by industry over recent years as people have adjusted to the ideas in the CSRD. Typically, they are attended by representatives of some of our larger companies in Ireland. They have all spoken passionately about their belief in helping their supply chain to get up to standard to help them and to supply the right data. Anecdotally, it is in the interest of companies in scope to help their supply chain companies to provide the required information and do so as efficiently as possible. The message for SMEs may be that there is a competitive advantage to availing of the sustainability grants from the enterprise agencies as it potentially puts them in a better position to get into the supply chains of the larger companies that are going to be in the scope of the CSRD and CSDDD.
Ollie Crowe (Fianna Fail)
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I thank Mr. Forde. Will the Department provide updated guidance and advice to businesses throughout the process as changes continue to be made to the CSDDD and to the CSRD?
Ollie Crowe (Fianna Fail)
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With the Leas-Chathaoirleach's agreement, I will give my remaining time to Deputy Dolan.
Albert Dolan (Galway East, Fianna Fail)
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I found it interesting that there will be voluntary reporting. I presume there will be voluntary reporting guidelines and parameters. When the legislation is transposed and implemented and companies start reporting, how will we ensure the voluntary element is not seen as a cop-out or an opportunity to skirt the guidelines? I would appreciate any thoughts on that.
Mr. Colm Forde:
To clarify, the CSRD overall requirements are for companies that are in scope, that is, the larger companies referenced by Mr. Verdon. The voluntary standards only apply to SMEs in the supply chain, which are not in scope. The purpose of the voluntary standards is to be a protection mechanism for SMEs in order that they are not overburdened with the trickle-down effect of the regulatory ask of the companies that are in the scope. That is the purpose of the voluntary standards.
Albert Dolan (Galway East, Fianna Fail)
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In the case of a larger company that is in scope-----
Albert Dolan (Galway East, Fianna Fail)
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The voluntary standards do not apply. If, however, in meeting its obligations, a larger company has to get information from a smaller company that may be one of its main suppliers of an element or a product it is making or whatever, that is a voluntary matter for the smaller company.
Albert Dolan (Galway East, Fianna Fail)
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Okay, but a larger company can request of a smaller company that it meet those voluntary standards.
Albert Dolan (Galway East, Fianna Fail)
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In that case, it is not really voluntary.
Mr. Conor Verdon:
It is called voluntary because the first purpose of it is to provide an actual standard for SMEs which are not obliged to have a sustainability report but actually want to do one. That is where the voluntary comes from. Its link into the larger companies is in the context that if a larger company, as described by the Deputy, has to go to a smaller company to ask for details, it is not allowed to ask for anything beyond what is in the voluntary standard. We talked earlier about the value chain cap as well, so that is what that means.
Albert Dolan (Galway East, Fianna Fail)
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That is helpful. I am conscious the time goes quickly but-----
Mr. Colm Forde:
If I may add something, companies that are not in the supply chain of companies that are in scope could see this as an opportunity to create a competitive advantage. I referenced the Amárach research and how important sustainability is to our SME client companies. When these voluntary standards are published that cohort of SME companies might think that if they meet those voluntary standards, it means they cannot be asked for anything else beyond that by any companies that are in this global supply chain and that, therefore, it might be in their best interests to avail of an EI or LEO grant, put those standards in place and then market that to these larger companies and say they can be in their supply chain. That standardisation might give the larger companies comfort.
Albert Dolan (Galway East, Fianna Fail)
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That is helpful. Has the Department conducted or commissioned any impact assessment or cost-benefit analysis of the implementation of the CSRD and the CSDDD in Ireland?
Mr. Colm Forde:
The regulatory impact assessments will typically be done at European level when the proposal has been developed. Typically, the Department would look at whether there are optional measures for us to do. We would do that in our public consultations. Mr. Verdon may wish to add to that.
Albert Dolan (Galway East, Fianna Fail)
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For the CSDDD specifically, how does the Department intend to designate a supervisory authority and what powers will it have to ensure compliance?
Albert Dolan (Galway East, Fianna Fail)
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What is the Department's assessment of the administrative and financial burden of the CSRD on Irish enterprises, especially SMEs and indigenous supply chains? I take it that a lot of the SMEs are scoped out but does the Department have an assessment of what that administrative and financial burden will be for the larger companies that are in scope?
Mr. Colm Forde:
As Mr. Verdon and I mentioned, that would have been in the regulatory impact assessment at European level, which was done by the European Commission. That work would not specifically be done on Irish companies but, as we referenced, the changes being proposed in the omnibus legislation are radically reducing the number of companies which will be in scope for CSRD reporting.
Albert Dolan (Galway East, Fianna Fail)
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Is there any anticipation of what the general cost will be for a company that is in scope? Will it be 1% of revenue or another percentage?
Albert Dolan (Galway East, Fianna Fail)
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That is okay. It was just something I was curious about. This question might be a bit premature as well but is the Department considering a phased or proportionate implementation of the CSDDD?
Mr. Colm Forde:
That will all be set out in the omnibus proposals and the directive. There are very clear timelines for the date it must be transposed by and when it comes into effect. As Mr. Verdon and Mr. O'Neill mentioned, there are different phases where the laws become applicable to certain categories of company at an earlier stage than others. That will all be set out in the European legislation. We do not have national discretion on those timelines.
Albert Dolan (Galway East, Fianna Fail)
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In terms of companies that have to comply with these regulations, what sort of support around awareness, training and technical readiness is the Department planning to roll out?
Mr. Colm Forde:
As we mentioned a couple of times, we have done a huge amount of stakeholder engagement, such as webinars with hundreds of companies and professionals taking part. We have an FAQs section on our website which is updated on a regular basis. That is also on the Commission's website. I also referred to the supports in place for SMEs with Enterprise Ireland and local enterprise offices. We will continue that engagement. Senator Fitzpatrick mentioned the retail industry. There is an enterprise forum in our Department on which retail is represented and we update those forums very regularly. They are supportive of the simplification and burden reduction agenda.
Albert Dolan (Galway East, Fianna Fail)
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Sometimes stakeholder engagement can be difficult because it can be seen that Departments are ticking a box and might engage with the likes of IBEC or the Small Firms Association. The Department was engaging directly with real companies and stakeholders at grassroots level. Is that correct?
Mr. Colm Forde:
The Department has done a combination of things. We have done the big picture webinar stuff but we also had a number of submissions to which we have responded and we have also met representatives of a number of companies bilaterally at their request. We do not consider it ticking a box. We are very passionate about better regulation principles and making sure we have properly considered each issue in detail and are getting things done as effectively as possible from m a regulatory perspective.
Mr. Colm O'Neill:
If I could add to that, in relation to the CSDDD we have met representatives of a number of civil society organisations and business representatives. As Mr. Forde said, we have received a number of representations as well. In regard to guidance, the Commission is required to produce guidance to assist companies in complying with the requirements of the CSDDD. One of the proposals is to bring forward that guidance, for example, it is proposed to bring forward to July 2026 the guidance on how to comply with the due diligence obligations.
A helpdesk will also be available to provide assistance.
Albert Dolan (Galway East, Fianna Fail)
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I thank Mr. O'Neill and Mr. Verdon.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I welcome Senator Patricia Stephenson to the committee.
Patricia Stephenson (Social Democrats)
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I thank the Leas-Chathaoirleach. I also thank the committee for inviting members of the foreign affairs committee to join the meeting.
It is important to highlight that no assessment was done on the impact of the omnibus on the CSRD and the CSDDD at European level. A complaint has been filed and an inquiry is under way into the fact there has been no impact assessment. It was noted that the changes to the CSDDD will significantly reduce the administrative burden. That is not a read-out I agree with. These changes completely undermine the directive's policy objectives and, rather than reducing administrative burdens, tear apart the very foundations of the CSRD and the CSDDD, which we have not seen. It has not been transposed yet so we do not know the impact of that, but the core of those provisions is being stripped away.
We have heard the word "simplification" quite a lot but that is a misrepresentation of what the omnibus will do. Under the omnibus, the limitations to the due diligence duty to direct business partners would increase the volume of due diligence paperwork without improving its quality or effectiveness. We talked at length about the risk-based approach of the CSDDD, that companies will not have to apply the same checks to every supplier, will focus their due diligence checks on where it matters and that this risk-based approach will be more efficient and more strategic. The European Central Bank said that the omnibus changes regarding the due diligence duty would increase the complexity and the regulatory burden rather than reducing it and simplifying compliance. As that has come from the ECB, I will push back on the analysis that the CSDDD will reduce the regulatory burden for companies. In fact, what I am hearing today highlights that the omnibus due diligence duties would be more complex than the CSDDD responsibilities, especially for SMEs, because of the risk-based approach.
Article 5 was talked about but the omnibus proposal's changes to Article 8 of the CSDDD significantly weaken and compromise the effectiveness of the due diligence duty established in Article 5. That Article 8 piece changes that. What we are seeing is a shift away from the risk-based, tier-agnostic approach to a very tier-restricted compliance one in the omnibus in respect of Article 8. It guts the spirit of Article 5 in many ways and also undermines the risk-based approach required by the UNGPs and the OECD guidelines, which call for proactive due diligence throughout the entire value chain.
I am also very concerned about this focus on tier 1. As many of us will know, human rights abuses and violations happen much further down. It is never the tier 1 partner. Most companies will not see the human rights abuses in their supply chain. This will render the legislation completely meaningless in addressing the human rights violations we have seen, such as the Rana Plaza incident, which was such a big thing for many of us in terms of the supply chain.
I will highlight a few other areas we have not addressed yet. First, the omnibus proposal seeks to remove the EU-wide civil liability regime, which would mean that the civil liability framework in the CSDDD would be made optional for member states and, under the omnibus, would fragment its enforcement. Second, the omnibus removes the obligation for companies to put their climate transition plans into effect. That will seriously weaken the CSDDD alignment with the Paris Agreement and our EU climate goals. Third - I am so sorry but I will get to get to a question - the omnibus curtails stakeholder engagement by narrowing the definition of stakeholders. I am very concerned about that as it relates to civil society perspectives and NGOs down the supply chain that are responsible for advocating on behalf of workers in the supply chain who are facing human rights violations.
What is Ireland's position on the substantive provisions of the CSDDD, which are under threat by the omnibus, specifically, risk-based due diligence and that Article 8-Article 5 piece, the civil liability regime, climate transition plans and stakeholder engagement? I am so sorry for speaking so quickly; I can clarify if the officials have not heard. If the Government's position is that we do not want to see human rights or environmental protections undone, will Ireland take a clear vocal stand in defining the core provisions of the CSDDD at ongoing negotiations in Brussels, including today's? A meeting of the committee of the permanent representatives is happening today. What is the language that will be used by departmental officials when they are in those negotiations on those pieces in respect of human rights and the environment that the Government said it would not want to see maintained? Right now, we do not see that feeding into the discussions happening during the negotiations in the room.
Mr. Colm Forde:
I thank the Senator. I will try to capture as much of that as I possibly can. We referenced already that the negotiations are confidential in nature, so I ask her to please bear that in mind as I try to address her questions.
What the Senator did not reference in her comments on the risk-based approach and the focus on tier 1 was that plausible information piece. While you would go to tier 1 on risk-based assessment, if the company that is in scope is made aware of plausible information regarding any due diligence concerns at any other area down the supply chain, then it has to act on that. It is not just limited to tier 1. Companies have to be proactive as far as tier 1 and where they become aware of information outside of tier 1, they are obliged to act on that. That would be subject to oversight and regulation by whoever the national competent authorities would be.
On the Senator's view on whether this reduces regulatory burden, the whole policy ambition behind this and the reason the Minister is so supportive of the omnibus proposal is the fact that the perception is it will reduce administrative burden. We outlined at length throughout the discussions how companies in the value chain, only as far as tier 1, will be required to provide that information in terms of the CSDDD. The companies that are in scope will be limited in the information they can seek for companies with less than 500 employees. It will reduce the administrative burden on the supply chain. On the CSRD, we have spoken about how the companies in scope cannot ask for information above and beyond the voluntary reporting standards. In our view, that is a clear reduction in administrative burden for SMEs and the supply chain.
The Senator referenced EU civil liability versus national liability. Two issues are at play there. Access to justice and civil liability would still exist either under the current directive or in the omnibus proposal. The question is whether it is EU-wide and consistent across Europe or whether it is different depending on which jurisdiction you are in. I mentioned the Draghi report. One of the criticisms that Mario Draghi highlighted was that fragmentation throughout the Single Market, the different regulatory regimes and different jurisdictions. Ireland is very supportive of reducing misalignment across the Single Market, so that it is easier for businesses to operate in it and for everyone to comply with their obligations. Ireland is more favourable towards that EU civil liability piece.
I also mentioned the climate action plans. Again, we do not view the CSDDD as replacing any other obligations or commitments that companies are subject to under national or European law. I referenced the fact that-----
Patricia Stephenson (Social Democrats)
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I do think that the CSDDD puts a ceiling on that. Sorry, we are running out of time. The term "plausible information" is a highly problematic legal concept that is not defined under EU law. That then puts the burden on NGOs and civil society stakeholders to identify those challenges within the supply chain, so "plausible information" is not really substantive enough.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I thank Mr. Forde. With respect, I will let the Senator come back in later on.
Linda Nelson Murray (Fine Gael)
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I offer huge apologies. I am running in and out because I am at two committees at the same time.
I mentioned something about this issue last week. I am learning a lot about all this, and a lot of businesses and companies want to do the right thing when it comes to human rights but at the same time, as a business owner myself in the SME sector, we really do not need any more stuff on our shoulders. This is especially so with flat structure companies where the owners are doing everything themselves. This question might have already been answered, but I reference a point made in the opening statement, "For SMEs that are direct business partners of in-scope companies ... the amount of information they are required to provide during due diligence mapping will be limited, especially for those with fewer than 500 employees. This is something SMEs will have to work on to send to the bigger company they are dealing with. Do the officials think it will take a couple of hours a year? How much information do they think will be needed? Has it been looked at down to the level, for example, of Jack Smith's company dealing with the company that has 1,000 employees somewhere along the chain and how much information his company will have to send in? I have a small business in mind.
Linda Nelson Murray (Fine Gael)
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Yes, as part of that mapping and their due diligence.
To put it in perspective, representatives of IBEC, when they were here last week, spoke about how this will really impact all types of businesses. I asked how many larger companies it would impact initially. I was told it was approximately 70 but that smaller companies that deal with these larger ones will, in time, have to liaise with the bigger companies as part of their mapping. Mr. O'Neill is saying it will place a limited burden on smaller companies. How big is that burden envisaged to be and how much work will be involved?
Mr. Colm O'Neill:
The smaller businesses are outside the scope of the CSDDD. When the larger companies are doing their due diligence, in general it is tier 1 but, as we have discussed, the plausible information may bring in the SMEs, which have to provide the information. The mapping of the due diligence is done by the larger companies and there are supports available in the directive to assist SMEs. The directive provides that the larger companies can provide SMEs with tools, guidance and access to financial supports.
As regards the time burden, I do not know.
Linda Nelson Murray (Fine Gael)
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Sorry, maybe I have misunderstood this. Smaller businesses that are dealing with large businesses that have to do this will not have to supply any information. Reading this, I understood they did under the CSDDD.
Mr. Colm O'Neill:
Sorry, what I am saying is that the due diligence applies to tier 1 direct suppliers only. That is in general so that would exclude the smaller businesses. If the larger company has plausible information that there may be adverse impacts or the potential for adverse impacts further down the line, that is when the indirect suppliers can come in.
Linda Nelson Murray (Fine Gael)
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There is nothing to worry about at all then.
Mr. Colm Forde:
I guess the ambition is that what the large companies would seek would be quite limited. If I hear the Senator's query correctly, the regulation speaks about it being limited to companies with fewer than 500 employees. I get the sense the Senator is talking about companies with significantly fewer employees than that. It is difficult to envisage a situation where a company of the scale the Senator is referencing would be asked for a substantive amount of information under this directive.
The Senator may have missed my contribution earlier when I referred to research the Department had undertaken with Amárach Research to see how important sustainability was for companies. For four out of five companies, it was very important for a range of reasons, for instance, for doing the right thing and to improve their competitiveness. I also referenced the range of supports available to companies through Enterprise Ireland and the local enterprise offices to help companies in that journey. We are conscious of what impact any commitment to sustainability might have on companies and we are trying to help them as much as we can on that journey.
Alice-Mary Higgins (Independent)
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On that, I have different information. What we have heard is that many of the companies that were on that sustainability journey and had put the work in, perhaps because they were looking to become sustainable suppliers, and those who have done the courses in the colleges are now having the rug pulled out from underneath them. For example, from talking to somebody who works directly preparing companies for sustainability, I know that person's client list halved in February. I do not know when the Department's Amárach research was done but what we have seen is that those companies that invested in sustainability are now at a competitive disadvantage because those that chose not to do so are being rewarded and effectively the Department is creating a disincentive to engage in this. There is a clear disincentive now. It is as though people were fools to try to get their sustainability in order because this is being limited.
Is it not somewhat ridiculous to have companies be told they should publish a climate plan but they do not have to implement it? Will Ireland suggest that implementing the climate plan be part of the new reform proposal, rather than removing the requirement for implementation?
The risk-based piece is creating a greater burden because it is only going to the direct suppliers now. We should bear in mind that these are the large companies in the CSDDD, those with 1,000 employees and over €400 million in turnover. Previously, the responsibility was on them to assess the full supply chain. Now, that goes onto the direct supplier. These companies are getting to put the responsibility one point down the chain and it is there that companies are having to do the work and provide the information or else NGOs, civil society and unions have to come up with the information and create cases with zero money in many cases in very difficult circumstances. When we hear about regulatory burden, we need to be clear that this is not about packaging size. This is about human rights and environmental regulation. Is it not the case that this will make it harder to track, for example, issues in relation to conflict minerals, child labour or the poisoning of rivers? Those are areas we want to see regulated and where we want to set standards, whereas now companies will be at a remove. Where a massive company is buying something from a tier 1 supplier, unless somebody can come and make the case for them, it can actively ignore the four stages down the line. Does that not create greater risk that human rights and environmental abuses will continue in the supply chain?
On the non-implementation of climate plans, why not say whether Ireland will be in favour of the implementation of climate plans when it comes to the negotiations? The witnesses spoke of the risk-based piece. Why should the largest corporations, with €400 million in annual turnover, not be required to assess this? That was the position held previously by the Minister, Deputy Calleary? The Department has met with stakeholders. Has it met with civil society in the developing world down the supply chain? Has it met with the human rights defenders we hear about, some of whom are being killed in some of the affected factories? The original directive, which was good, came into existence because there was a real problem and now we are just hearing about its simplification.
Will Mr. Forde talk about the climate piece? Is the Department in favour of companies implementing their climate plans and will Ireland say that? In relation to the risk-based approach, is a greater risk being created by removing the obligation to assess risk from the large corporations and companies? Will Ireland consider supporting a risk-based approach?
James O'Connor (Cork East, Fianna Fail)
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I suggest we give the witnesses a chance to respond because the Senator has asked some highly relevant questions.
Alice-Mary Higgins (Independent)
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It is deregulation. A number of regulations are being removed.
Alice-Mary Higgins (Independent)
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No, it is a fact. The obligation to implement has been removed, for example.
Mr. Colm Forde:
The Senator mentioned the competitive disadvantage for companies that have already started the sustainability journey. We are conscious, as we outlined, that Ireland was one of the first countries to transpose the CSRD. Seventeen other countries have not done so. We have raised as an issue the concerns that Irish companies are complying with CSRD whereas in other countries that law has not been transposed.
We said that one of the competitive advantages Ireland seeks to have is to provide a stable regulatory regime that is proportionate and enforceable. As such, it is not ideal that the regulations are being amended so quickly. As the Minister, Deputy Peter Burke, has publicly stated, that is why the ambition is to have this done as urgently as possible to try to provide certainty to businesses so that they know how to invest appropriately and that the competitive playing field is levelled.
On the risk-based approach, the obligation still rests on the company that is in scope. They go as far as the tier 1 supply chain but the responsibility is still with the companies that are in scope. As we said earlier, if the company is aware of plausible information beyond that, the obligation is still on the company in scope to address that.
Alice-Mary Higgins (Independent)
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The Department is placing a limit on the information that can be sought. Is that a limit in terms of national legislation and the voluntary piece in terms of what information can be looked for?
Alice-Mary Higgins (Independent)
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Is that a limit on what can be looked for through national legislation or a limit on what an individual company can look for from its supplier?
Alice-Mary Higgins (Independent)
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In terms of implementation, and to continue the point, I asked about the increased risk of human rights or environmental abuses being created by the removal of the obligation on very large corporations to put a tiny fraction of their resources into assessing risk.
Alice-Mary Higgins (Independent)
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But is there an increase in risk of human rights and environmental abuses compared with the corporate sustainability due diligence directive, CSDDD, as it is currently?
Alice-Mary Higgins (Independent)
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Am I right in saying, and I am sorry but this is core on that question, that the original policy purpose was to address the risk of human rights and environmental abuses in a supply chain but now, the obligation on large corporations to assess that risk has been removed, except if an NGO happens to do an investigation and get it to their attention? That original purpose was reducing human rights and environmental risk down the supply chain. How is that still there? It is not still there for the company to do it. It is not there for states to do it. Are we just saying "if NGOs happen to do it"?
Alice-Mary Higgins (Independent)
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But this legislation's purpose-----
Mr. Colm Forde:
For example, there is a forced labour file currently going through the Commission where any products that are associated with forced labour will be removed-----
Alice-Mary Higgins (Independent)
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That is separate legislation.
Alice-Mary Higgins (Independent)
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But the purpose of this legislation-----
Alice-Mary Higgins (Independent)
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That is fine and one way to address it would be with the new legislation that is coming through but in terms of this legislation, its core purpose is the removal of human rights-----
Alice-Mary Higgins (Independent)
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-----and environmental risks.
Alice-Mary Higgins (Independent)
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I do not see a mechanism in the omnibus-----
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I will let the Senator come back in again.
Alice-Mary Higgins (Independent)
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-----whereby they continue to do that. And if the witnesses could just come in on the implementation of the climate-----
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I will let the Senator in again.
Alice-Mary Higgins (Independent)
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Perhaps I could just get one line on the climate fund.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Okay. Just one line.
Mr. Colm Forde:
As I said, the subject of negotiations are confidential in nature. Aligned with the requirements for the climate action plan and the CSDDD, under the national climate action plan in Ireland we have a commitment to reducing by 35% carbon emissions from our enterprise sector and we are helping companies to avail of that-----
Alice-Mary Higgins (Independent)
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Should companies have to-----.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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At this stage Senator, I am sorry but-----
Brian Brennan (Wicklow-Wexford, Fine Gael)
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No, you can come back in. I will give you an opportunity. I am calling now-----
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Sorry, but I am the Chair.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I am asking the floor. We are very respecting of time.
Alice-Mary Higgins (Independent)
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Of course. Absolutely. Please continue.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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There is a private session also. I request two minutes from each person please. That has to include the answer.
Mary Fitzpatrick (Fianna Fail)
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Can I just seek clarity on the agenda?
Mary Fitzpatrick (Fianna Fail)
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The agenda I received said we will go in to private session at 2 p.m. It is now 2.25 p.m. Will the Leas-Chathaoirleach clarify what stage the agenda is at?
Brian Brennan (Wicklow-Wexford, Fine Gael)
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The document the Senator received is an indication. It is up to the committee to decide. We had people coming in who are not members of the committee. We had to give them their time and be fair-----
Mary Fitzpatrick (Fianna Fail)
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I appreciate that. I have no objections.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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-----in respect of the Senators' questions. They were here right through and I felt they should be allotted the full time as well. That is why we overran but it is only-----
Mary Fitzpatrick (Fianna Fail)
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We have private business as well.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I am fully aware of that.
Mary Fitzpatrick (Fianna Fail)
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It is significant private business that we need to take care of.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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The document we get is an indication. If we had fewer numbers, we could be going at 2.15 p.m. It often has reversed as we-----
Mary Fitzpatrick (Fianna Fail)
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So what is our proposed end time for business today?
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I will ask the floor now. Do members agree to two minutes for everybody and we can-----
Mary Fitzpatrick (Fianna Fail)
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Is that two minutes for everybody from now? What happens if two more people come back? I just want to try to plan my day, like everyone else. I would like to understand when we are going into private session and when that private session will end.
Paul Gogarty (Dublin Mid West, Independent)
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People might indicate who wants to take his or her two minutes at this stage.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Okay, it is four, so it will be roughly ten minutes.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I would like to go back to the climate change point. The proposed weakening of the CSDDD in the omnibus package will remove the obligation on companies to put into effect climate transition plans. Does the Department have a view on the potential litigation and fines that will arise if Ireland fails to meet greenhouse gas reduction targets? In the event of fines will the State carry the can for companies that publish transition plans but fail to implement them? In the Department's analysis of this has a cost been put on what that would be?
Rose Conway-Walsh (Mayo, Sinn Fein)
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Okay, so I want to clear it up here. If we do not meet those targets - and we have the companies' supply chains and all of those for whom it is a voluntary issue so far - will the State end up carrying the can for us missing our targets in that regard?
Rose Conway-Walsh (Mayo, Sinn Fein)
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While it is a policy issue, in the Department's analysis did it look at what the impact would be? It speaks to the discussion earlier when Senator Stephenson spoke on the impact assessment not being done. Would this not have been fairly significant in balancing one against the other and in trying to identify it, as with a cost-benefit analysis?
Rose Conway-Walsh (Mayo, Sinn Fein)
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How is the State going to do that if it does not have-----
Rose Conway-Walsh (Mayo, Sinn Fein)
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One contradicts the other.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I thank the Deputy, I now call on Deputy Hayes.
Eoin Hayes (Dublin Bay South, Social Democrats)
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This will be more statements than additional questions. I hope the witnesses will forgive me that. When he stood up to speak to save the eurozone Mario Draghi used the phrase "Whatever it takes". We have joked a little bit about Mario Draghi's impact on mortgage interest rates for several people. That was a pivotal moment in the European Union, in the eurozone and in our own economy. That way of thinking is applied for things like monetary policy and trade and it is often not applied for things like climate and human rights. This is a significant concern for a lot of people around the table here today. Mr. Draghi's report was seminal and it was very important from the perspective of thinking about what the future of the European economy should look like and across different areas. I strongly agree with the idea of harmonisation and simplification. Given the fragmentation of different regulations between member states, the transposition issues and all of that, it is absolutely fair that we would try to rationalise this for businesses and make a stronger Single Market. It was not about reducing regulation, however, and while we may have a difference of opinion on whether this is reducing regulation, oftentimes when we talk about the Draghi report it is used as a bludgeoning stick of saying that we need to get rid of certain regulations rather than talking about the simplification agenda.
I would like to applaud the Department on one thing, which is the Enterprise Ireland supports for businesses in this regard. I encourage the Department to keep on going with that. It will be really important, especially as we continue with green agenda regulation, that these businesses get the support they need and not just financial support but also the expertise.
I am open to correction but my understanding is that outside of the contributions of Senator Alice Mary Higgins, there has not been substantive scrutiny or substantive discussion of these proposals in the Oireachtas up until last week. There is a question on how we actually go forward on this in such a short time when there are some significant concerns.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Did Deputy Gogarty indicate that he wishes to speak?
Paul Gogarty (Dublin Mid West, Independent)
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I am happy to waive it and just make a brief statement. I am very sceptical that the Minister is actually pushing this issue as far as can be done. Obviously, as was said, negotiations are confidential but I just want this recorded.
Patricia Stephenson (Social Democrats)
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Going back to the earlier point, Mr. Forde said Ireland is in favour of an EU-wide civil liability regime.
Mr. Colm Forde:
Again, coming back to the confidentiality of discussions, what we are saying is that as we are in favour of breaking down barriers across member states, we are in favour in general terms of a European solution, as opposed to leaving room for different transpositions in different countries, which leads to that fragmentation Deputy Hayes referenced.
Patricia Stephenson (Social Democrats)
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I feel that not having that EU-backed liability scheme, which the omnibus in its process removes, would actually lead to enforcement of fragmentation. That would be my perspective on it.
I will not take up too much of the witnesses' time. I agree with a lot of people that we have not had a huge amount of time to scrutinise and discuss this.
I am delighted to have been invited as a member of the foreign affairs committee to discuss it here. I know it falls under the Department but I think Mr. Forde mentioned in his opening statement that the omnibus proposals are vast, and there are justice components as well. It feels very rushed by the Commission. It is completely at odds with the years of discussion on the corporate sustainability reporting directive and the corporate sustainability due diligence directive. We have not even had time to transpose the corporate sustainability due diligence directive and see the positive impacts it would have brought to the supply chain. We have not had the proper opportunity as legislators to discuss this. There are pushes to have it finalised by the end of the Danish EU Presidency in six months. It is completely at odds with where we stood before. The omnibus tears to pieces the main ambitions of the corporate sustainability reporting and corporate sustainability due diligence directives.
Alice-Mary Higgins (Independent)
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The line about confidentiality is quite different from just one year ago when I engaged with the then Minister, Deputy Calleary, and Ireland was championing the idea that we should add new factors and considerations to be assessed for risk, such as gender equality components. It was not just looking at human rights and the environment but making sure gender and abuses such as gender-based violence were properly considered in the supply chain. Ireland was quite open about where it was, whereby we were looking to strengthen this important new piece of accountability for the very largest corporations. Now, we are in a position where we cannot really say, whereas previously we had years of open engagement.
A harmonised civil liability regime is the idea of common enforceability and ensuring there is not a race to the bottom in that some places will fine you and others will not. That is different from overall harmonisation, which would place a ceiling on the national ability to produce regulations and standards. Is it a common floor or a common ceiling regarding harmonisation?
My final question is a straightforward one - almost yes or no. If there are climate plans, should they be implemented? It affects us all. It affects Ireland and other places achieving their goals. Is there any reason not to ask incredibly large corporations to implement their climate plans?
Alice-Mary Higgins (Independent)
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The corporate sustainability due diligence directive did not require them to be implemented.
Alice-Mary Higgins (Independent)
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There is no requirement for implementation, however.
Mr. Colm Forde:
That is what was in the draft omnibus proposal. The Senator's other question was about the EU harmonisation. I may have misunderstood but if it is common across the EU, the floor and the ceiling are the same because it is a common standard across the EU and the level of enforcement would be the same across the EU.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I am sorry, I have to wrap up. I thank the witnesses for their honesty, openness and compassion. As they can see, there are still a lot of questions. The word "rushed" might be a fair statement. There is a need for further dialogue. I hope the witnesses will take that out of the room with them. I will allow Mr. Forde to reply. I reiterate how appreciative we are of how frank they were in their answers. There was also positive engagement from the floor.
Mr. Colm Forde:
I thank the Leas-Chathaoirleach. I agree completely. We are in a fairly unprecedented space with these omnibus proposals. On foot of the competitiveness agenda and EU Council level, the Draghi report and the new EU Commission programme, they want to operate at speed to address the regulatory burden. To go back to Deputy Hayes's point, it is not about reducing regulation but streamlining and reducing admin burden. That is the focus. The clear direction from the Council in March was to do this as quickly as possible so the Leas-Chathaoirleach is right to say it is rushed. On the number of meetings at official level, I think we are already on the fourth compromised text. This is happening incredibly quickly at EU level. That is the clear political direction the Commission has been given by the EU Council. We referred earlier to the voting at the European Parliament on "stop the clock". There was an overwhelming majority in favour. I think there were 560 votes in favour with low double digits against so it is the clear political direction. At COMPET, the contribution from every member state is to get this done quickly and urgently. That is how it is operating.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I think we are on the same page, with all due respect, in that we feel it is being rushed. It is huge legislation. There are so many factors from what Mr. Verdon started off with right around the table. Will the witnesses take that on board and bring it back to the relevant authorities? I am sure there will be further engagement. We will now go into private session.