A textile business very popular based in Spain. It sells in Spain, (mostly) pays taxes in Spain, and from there it manages its operations all over the world. But that textile company Does not produce in Spainhowever subcontracting to other companies India to have their clothes sewn there. One day, one of the factories subcontracted by the Spanish company caught fire and the press after the fire. inhumane working conditions where employees work. No contracts, few kids, endless shifts, no ventilation, hardly any lights…
So far, he claimed, the Spanish firm had little responsibility for all of this, that it was a third-party affair and that they had limited themselves to ordering a few pieces of clothing and paying for them. From now on, the European Union is preparing a directive to make that company mandatory. take responsibility for human rights Y environmental It is fulfilled both within its own organization and along the value chain that passes from the store where it is sold to the workshop where it is made, the centers where it is designed and the cargo ship that carries half the world. Or to a winery in Catalonia that bottles wine but buys cut wood from the Amazon for its barrels. Or a tech maker importing plastics from ultra-polluting industries in Southeast Asia.
The “Corporate Sustainability Due Diligence Directive” is currently under discussion European Parliamentpredicted that it could be approved before next November 2023. It will then be a phase that will take at least another two years to transpose each country into its own laws. Along with the directives on digital rights and the directive referring to the minimum wage, one of the stellar measures of his mandate Ursula Von der Leyen.
At a time when regional governments in Spain are lowering taxes to compete financially with each other, Europe is trying to veto companies that have both a European parent company and foreign companies but have a subsidiary in 27 of its territories from competing with each. other at the expense of human rights or worsening the situation climate crisis. According to ILO data, 27.6 million people worldwide are in forced labor today and 12% of them are children.
Which companies will be affected?
Libra is still such a thing MPs finish defining. As explained by the relevant Ciudadanos MP Adrián Vázquez, the new directive will oblige any European company that bills 150 million euros a year and has more than 500 employees. Or if it is devoted to a classified risk sector, such as in textiles, agriculture or forestry, the scale drops to 40 million turnover and 200 employees. And in the case of firms with a foreign parent company but a subsidiary in Europe, they can be held responsible for 150 million turnover regardless of workforce.
What obligations will they have after the Directive comes into force? The first would be to report annually with your income statement all the measures you actively take to prevent breaches throughout your production chain. Until now, this was optional in almost all of Europe – only France, Germany and Denmark had some kind of binding clause – and companies could not be sanctioned by the courts of each state if they did not do so. “Voluntary action does not appear to have led to an improvement large scale and therefore negative externalities of EU production and consumption in all sectors are observed both inside and outside the Union”, know the drafters of the directive proposal.
And how can governments force companies to comply? Here is one of the keys of the new directive that needs to be defined. There are political forces that defend it. Introducing ‘cascading provisions’that is, the parent company imposes provisions that require them to comply with minimum rights in all contracts signed with its subcontractors. Sanction or termination of contract. The problem with this model is that such items it ends on paper and there is no real oversight from the same. The alternative is to force the parent company to oversee and oversee the entire process, which could turn top management down, especially if it’s not large companies.
The European Union, which does not have an army or a coordinated diplomacy, is trying to regulate its commercial relations with one of its few assets: Being a continent with high purchasing power, millions of citizens, and companies and large companies that do not want to give up as a market. . The message is clear: “If you want to do business here, you must ensure that human rights and the fight against the climate crisis do not end at the borders of Europe.”