Statement of Finnish Business and Society (FIBS) 6 February 2024: Corporate Sustainability Due Diligence Directive
The news about the threat of rejection of the Corporate Sustainability Due Diligence Directive (CSDDD), which has been in negotiations in the EU for several years, raised serious concerns at FIBS, as well as among our member organizations. This sudden opposition also by the Finnish government is unexpected and regrettable, as several positions deemed important to Finland were included in the final proposal. At FIBS, we maintain that Finland should actively support the CSDDD, and to seek suitable ways to introduce the directive into our national legislation.
Through its close and regular collaboration with Finnish enterprises FIBS has witnessed their positive stance towards the strengthening of the corporate sustainability regulation. When implemented, the directive would benefit enterprises in a number of ways. The directive is important particularly as Finland does not have its own national corporate sustainability legislation in place. Many Finnish enterprises have already made plans and investments in preparation for the directive to enter into force and for it to be incorporated into the national legislation around 2026. The collapse of the EU-wide directive would bring discussions of a national-level legislation back to the drawing board. A patchwork of national sustainability laws in Europe would be a significantly worse, as well as a less efficient alternative to the CSDDD.
The CSDDD would harmonize the sustainability work of companies throughout the EU. This would help companies in allocating the necessary resources towards sustainability efforts and to increase their effectiveness. The directive would also positively affect the competitiveness of Finnish enterprises, as irresponsible enterprises would not be able to derive an undeserved competitive advantage at the expense of responsible enterprises.
The corporate responsibility directive is based on voluntary documents and soft law, such as the UNGP (2011) which provides guidance for enterprises’ human rights work, as well as the OECD’s guiding principles for multinational companies (last updated 2023). Several enterprises in Finland and elsewhere in the EU already use these guidelines when planning their operations. However, it is clear, that mechanisms based on voluntary action have not been a sufficient driver for responsibility work in a broader sense.
The current critical attitude which threatens the CSDDD stems from two contentious inclusions to the draft proposal: 1) the possibility of human rights victims and adversely affected communities to seek class-action lawsuits and 2) the obligation of enterprises to present evidence. However, these points are not unambiguously problematic at the substantive level, as can be further read from the Finnish Corporate Responsibility Law Association’s statement drafted by a group of legal experts.
The role of enterprises in solving global sustainability challenges has been increasingly emphasized in recent years. However, for enterprises to succeed in this role, business organizations need clear and consistent frameworks, based on international agreements and principles. The controversial inclusions to the CSDDD proposal address adversely affected stakeholders’ and communities’ ability to seek justice. This is fully in line with the UNGP phrasing on business responsibility vis-à-vis human rights. As such, also FIBS endorses the additions as a useful addition to the CSDDD proposal, and maintains they do not constitute a sufficient basis to overturn the proposal in its entirety.
Until now, Finland has supported the adoption of the corporate responsibility directive and has wanted to be a model State for corporate responsibility. FIBS hopes this is still the will of the Finnish government. The hesitance at this late a stage to approve the long-negotiated CSDDD paints a different type of picture, and the implications might be farther reaching than the Finnish government might realize. However, it is still not too late to make a different choice.
More information:
Kimmo Lipponen, CEO, FIBS, +358 40 758 7247, kimmo.lipponen@fibsry.fi
FIBS is the largest corporate responsibility network in the Nordic countries. Our membership includes approximately 450 organizations, three quarters of which are companies. Our membership is particularly focused on large Finnish companies, but we work cross-sectionally with the entire Finnish business sector. FIBS has supported companies’ responsibility work with a long-term approach since its foundation in 2000, and we have thus developed a strong understanding of both the development of the responsibility field and the needs of companies in terms of responsibility issues.
