European Commission publishes a proposal for EU corporate social responsibility legislation

The EU is making progress with the preparation of corporate social responsibility legislation. Today, the Commission published a proposal for a Directive on corporate sustainability due diligence. Next, the Commission proposal will be discussed by the EU Member States and the European Parliament. The Ministry of Economic Affairs and Employment will organise a stakeholder event regarding the proposal on 9 March 2022. Stakeholders’ views will be taken into account in the formulation of Finland’s positions.

On 23 February 2022, the European Commission published a proposal for a Directive on corporate sustainability due diligence, or the European Union’s corporate social responsibility legislation. The objective of EU-level CSR regulation is to promote respect for human rights and the transition towards a carbon neutral economy. Another objective is to provide a level playing field and legal certainty for businesses operating in the European Union.

“Finland welcomes the Commission’s proposal and will actively participate in the negotiations concerning the contents of the law. It is important to have CSR regulation in place, and the Government wants to actively work towards this goal both within the EU and nationally. We will now begin to formulate Finland’s positions on the Commission’s proposal,” says Minister of Employment Tuula Haatainen.

This is the first proposal for general corporate social responsibility legislation at the EU level. The Commission feels that voluntary actions taken by companies have failed to generate a sufficiently positive impact on a larger scale. 

The Commission proposes that a due diligence obligation be imposed on companies. The proposal sets out a corporate due diligence duty to identify, prevent, bring to an end, mitigate and account for adverse human rights and environmental impacts in the company’s own operations, its subsidiaries and their value chains. Companies will also be required to monitor the effectiveness of their due diligence measures.

Adverse impacts may include restrictions on employee freedom of association or toxic discharges into the environment. The proposed directive would also contain provisions on the legal consequences to companies of any breaches of CSR legislation. 

Ministry of Economic Affairs and Employment to organise a stakeholder event on the EU’s CSR legislation

The Ministry of Economic Affairs and Employment is responsible for preparing Finland’s position. The standard preparation procedure will be followed when formulating Finland’s position on the Commission’s proposal. A broad range of stakeholders will be consulted during the preparation process. The Government and Parliament will jointly decide on Finland’s position.

The Ministry of Economic Affairs and Employment will organise a virtual event on Wednesday 9 March at 9.30-11.30 to consult stakeholders on the Commission’s proposal. If you would like to participate, please sign up by 7 March via the Webropol link.

EU-level discussion of the Commission’s proposal will continue in the European Parliament and between the Member States in the Competitiveness Council. 

Need for national CSR legislation to be assessed

As the EU-level CSR legislation is being drafted, Finland is preparing to draft national CSR legislation based on the Government Programme. The Ministry of Economic Affairs and Employment has been working on a memorandum concerning the due diligence obligation. The memorandum, which will be published in March, analyses various perspectives on the CSR regulation.  

The national preparations and advocacy work on the EU-level CSR legislation support each other. 

Inquiries:
Iiris Niinikoski, Special Adviser to the Minister of Employment, Ministry of Economic Affairs and Employment, +358 295 047 372
Liisa Huhtala, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, +358 295 047 062
Sami Teräväinen, Senior Officer, Legal Affairs, Ministry of Economic Affairs and Employment, +358 295 060 088