European recommendation on “Due diligence through the supply chain”: good intentions, but with completely detrimental consequences

“Improve the world: yes, but not by shooting ourselves in the foot.” The N-VA delegation in the European Parliament opposes a report on the “Corporate due diligence requirements” that will be voted on on Wednesday. “The report contains unacceptable proposals that are detrimental to our SMEs,” warns delegation leader Geert Bourgeois.

Tomorrow the European Parliament will vote on a recommendation to Commissioner Reynders on “Corporate due diligence requirements”. The N-VA delegation opposes the current texts and warns of the detrimental consequences for SMEs. “This report has good ethical intentions, but contains unacceptable proposals, such as a harmful liability scheme and unworkable burdens for our SMEs. If Commissioner Reynders goes along with this blindly, the consequences for our precious SME fabric and our prosperity are incalculable,” said N-VA delegation leader Geert Bourgeois.

Geert Bourgeois: “Corporate social responsibility is an ethical priority, but this is out of proportion”

The European Parliament wants a new law on due diligence requirements to oblige European companies to scrutinise their entire supply chain to detect, prevent and remedy human rights violations, the environment or good governance. Corporate social responsibility is an ethical priority for the N-VA and for him personally, Geert Bourgeois says. “It has always been an important link for a sustainable trade policy. But this proposal takes no account of a ‘level playing field’ and affects our SMEs disproportionately. It cannot be the intention to pass the responsibilities of governments on to the business community.”

Assita Kanko: “No human rights violations on our shelves”

Assista Kanko thinks that products that result from human rights violations must never reach our shelves. “For example, cotton produced by the systematic exploitation of the Uygur population must be removed from our economy. We need a trading framework that is free, transparent and fair. But laws that impose disproportionate financial and administrative complexity on small and medium-sized businesses are not the way to achieve this.”

Legally enforceable best efforts obligation for multinationals

The N-VA supports the efforts to put an end to work in inhumane or unsafe conditions, forced labour, child labour, environmental violations and corruption. Due care and transparency are key elements to be pursued throughout the entire supply chain, Geert Bourgeois says. “There are many dozens of voluntary initiatives with labels, but they are not producing the expected results. Legislation will, therefore, indeed be necessary, but care must also be taken here. We want to leave enough room for the European Commission to develop a feasible and workable proposal based on an impact assessment that also takes into account the Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness of European industry. However, the proposal does not provide legal certainty. It contains many ambiguities and contradictions by sometimes opting for an obligation of result and for an obligation of best efforts at other times. The N-VA wants a legally enforceable obligation of best efforts across the board for multinationals.”

Reversing the burden of proof is detrimental

The N-VA delegation opposes making our companies accountable for any violation of human rights, the environment and good governance in their supply chain. This reverses the burden of proof and places it on companies. In addition, the proposal wants “all victims worldwide to be able to bring such liability claims against EU companies before a European court, choosing the legal system that offers them the highest protection.”

How on earth can a company continually monitor compliance with safety conditions, working conditions, environmental standards, etc., in every part of the supply chain? They should not be responsible for third countries that perform poorly in that area and that often lack proper regulations or fail to enforce them.

Support SMEs instead of imposing excessively heavy burdens on them

The N-VA wants the EU to support SMEs instead of imposing far-reaching obligations that make their internationalisation virtually impossible. Whereas this will be a heavy burden for large companies, it is a task that is impossible for our SMEs to cope with and will impose immense costs on them, the consequences of which will also have to be borne by consumers. On the contrary, the N-VA wants the EU to help SMEs with a support point that assists them and provides information about the various links in the supply chain.

According to Geert Bourgeois, the text opens the door to procedures by questionable NGOs, whether or not supported by foreign powers, to make life impossible for our European companies. “Improve the world: yes, but not by shooting ourselves in the foot.”

The N-VA’s advice to Commissioner Reynders:

• Proceed with great care.
• Conduct a rigorous impact assessment, including the implications for our businesses worldwide.
• Don’t reverse the burden of proof.
• Clearly impose an enforceable obligation of best efforts on multinationals.
• Work on global regulation and consumer awareness campaigns as well.
• Don’t make the obligations applicable to SMEs, but set up a support point for them.