Louise O'Reilly (Dublin Fingal, Sinn Fein)
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1. To ask the Minister for Enterprise, Trade and Employment if he will outline his Department's position on EU legislative proposal COM (2022) 71 on due diligence and corporate sustainability. [53894/22]

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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The question relates to the corporate sustainability due diligence COM (2022) 71. It is an extremely important proposal, which I believe we need to get right. From the hearings we have had and the small piece of research into this that I have done I believe there is a real opportunity for us to get this right and make a difference.

Dara Calleary (Mayo, Fianna Fail)
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I thank Deputy O’Reilly for the question on the proposal for a directive on corporate sustainability due diligence, CSDD, which was published by the European Commission on 23 February 2022. It addresses corporate behaviour and due diligence processes for the companies within its scope. The proposal focuses on establishing a system within company law and corporate governance to address adverse human rights and environmental impacts arising from companies' own operations, their subsidiaries' operations and their value chains.

At the outset I wish to state that Ireland is supportive of the objective of the proposed directive, which should promote responsible business conduct and is seeking to ensure that the proposals strike the right balance by providing effective protections while ensuring that the measures to be implemented by companies are clear, proportionate and enforceable. The proposal will apply to large companies, both EU and non-EU. SMEs are not directly within scope but may be indirectly impacted under the proposal, for example, if they are part of a large company's supply chain.

The proposal has the potential to be far reaching and it is vital that we get it right. Good progress has been made in discussions to date at EU level but further work is needed to clarify aspects of the proposal, ensure that the practical implications are well understood and that the obligations on companies are reasonable and effective. For example there has been relatively little discussion of financial sector aspects of the proposal and clarification has been sought on the interaction of the proposal with the suite of existing regulation in the financial sector. Fundamental issues relating to the scope and definitions remain and are currently under discussion. There is considerable interest in the proposal across a wide range of interests and my Department has been actively engaging with stakeholders, including civil society organisations and business representative organisations, since the proposal was published. Officials in my Department have met members of the Irish Coalition for Business and Human Rights, ICBHR, and with the UN special rapporteur on human rights defenders, the latest of which was two weeks ago. I myself will be meeting both groups in the coming weeks.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank the Minister of State. It was promised that this directive on corporate sustainability due diligence would ensure that EU companies undertook due diligence and checks along their full supply lines to prevent environmental abuses and human rights violations. The aims behind the directive were welcomed by progressive politicians, trade unionists, environmental groups and human rights groups. As it stands, however, unfortunately the law falls far short of what is needed to protect workers, communities and our environment. The directive falls short of what we need because it will only apply to companies with an annual turnover of €150 million and more than 500 employees and companies in high-risk industries such as agriculture and fashion with more than 250 employees. Will the Minister of State outline for me the clear policy position of the Irish Government on this corporate sustainability and due diligence directive? Will Ireland act at European level to raise the ambition of this directive and address the weaknesses that have been highlighted? The Minister of State said he met representatives of the ICBHR. I am sure it has outlined to him the weaknesses in this proposal. The Minister of State should indicate what is our position and what we are doing to address those weaknesses.

Dara Calleary (Mayo, Fianna Fail)
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As I said earlier I will personally meet representatives of the ICBHR and the other bodies in the coming weeks. SMEs are not within the scope directly but may be indirectly affected. Deputy O'Reilly confirmed what the thresholds are. We currently consider these thresholds to be appropriate. While I hear the Deputy's criticisms, it should be noted that the cohort of companies within those thresholds accounts for some 50% of the annual turnover of all the companies within the EU. It is important to ensure that the right companies are within the scope, namely, those companies with the potential to make significant adverse impacts on human rights and environmental matters and which, through their actions, have the ability to change value chains and change these matters. By extending the threshold the concern is you will take in much smaller companies that are not in a position to make the kind of changes that are necessary. The aim is to reach a degree of appropriateness in regard to the transposition of this directive. I certainly will pursue those issues. We will come back to the House on it.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Human rights abuses are never appropriate and no company is immune to engaging in them regardless of its size. Sorcha Tunney, the co-ordinator for the Irish Coalition for Business and Human Rights, stated recently "We need to take forced labour, deforestation and oil spills out of our shopping baskets once and for all, but this proposal just doesn't go far enough and is riddled with loopholes." The current guidelines as they stand will exclude 99% of companies. Only 1% of companies will be included. The reality is that any size of company can engage in human rights abuses or environmental destruction or both. Therefore the directive on corporate sustainability and due diligence has to be sufficiently broad and strong to reflect this. I am worried that the Minister of State stated that some companies may not be able to put the necessary checks and balances in place and make the changes that will be needed, because we are talking about changes that will prevent human rights and environmental abuses. It should apply in the broadest sense to as many companies as possible. I do not believe any company can claim immunity just by virtue of its size. We are talking about human rights abuses, we are talking about environmental destruction.

Dara Calleary (Mayo, Fianna Fail)
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To be clear, I am not saying that anybody should be absolved of any responsibility in regard to human rights or in regard to the environment. It is about the appropriateness and the effectiveness of the regulations. As I said, 50% of companies with the biggest turnover in the EU will be affected by this directive. We need to make sure that in its implementation it is effective and that it actually does what we want it to do, rather than it being an ineffective piece of work that does not actually achieve. My concern is also that by extending it in the manner on which the Deputy is focusing, companies that are not in a position to actually make effective use of it will not be able to do so. We have to get an appropriate balance and ensure that we get the result we all want in respect of environmental sustainability and human rights. The best way to do that is to ensure it is effective.