Due diligence directive could be ‘end of free enterprise’, warns Czech MEP

The European Commission’s proposal for a Corporate Sustainability Due Diligence Directive is causing a stir among Czech companies and Czech MEP Martina Dlabajová, who warn of a negative impact on businesses.

Once it comes into force, the directive will hold companies accountable for environmental and social transformation inside and outside the EU. According to the legislation, enterprises should identify and eliminate the negative impacts of their business activities in the whole value chain.

“We need to prepare for what it will bring and accept and share that responsibility. But if I were a radical, I would say that this is the end of free enterprise,” warned Czech MEP Martina Dlabajová (ANO, Renew), the European Parliament’s Committee on Industry, Research and Energy (ITRE) rapporteur.

According to Dlabajová, who spoke about the directive during a debate organised by the Czech Business Representation to the EU, CEBRE, the directive shifts all responsibility for sustainability to entrepreneurs.

Under the Commission’s proposal, the sustainability rules would apply to large EU and non-EU companies with more than 500 employees and a global net turnover of €150 million. Small and medium-sized companies (SMEs) are not formally included in the proposal but are to be affected by the legislation as they often supply large companies which are in the scope of the proposal.

Pavlína Kalousová, director of corporate relations at Plzeňský Prazdroj, a leading Czech beer producer, agrees with the criticism.

“We need to help small and medium-sized enterprises to prepare for compliance with the principles. This will mean, for example, advisory helplines or paying external consultants to map suppliers’ leaked emissions. But all this can be very financially demanding,” Kalousová said.

With the Council having already found a common position on the directive in early December last year, Parliament is expected to vote on 31 May – after which interinstitutional trilogue talks will begin.

The ambition is to bring the directive into force at the start of 2024.

(Aneta Zachová, Anna Janošková | EURACTIV.cz)