8 Dec 2022
The Council’s vision of the EU due diligence directive weakens the position of smallholder farmers and workers
On 1 December, the Council of the EU adopted its negotiating position on the Corporate Sustainability Due Diligence Directive (CSDDD).
Fairtrade welcomes that the decision enables the landmark EU initiative to move to the next phase. But we are disappointed that the Council failed to take a stronger position, particularly when it comes to protecting the rights of smallholder farmers and workers.
“For smallholder farmers it is very worrying that the Council’s position neither explicitly mentions living incomes as a human right, nor does it include purchasing practices in the due diligence obligation.” said Dr. Tytti Nahi, Fairtrade Director of Business and Human Rights.
The European Parliament is taking another route while working out its position on the same directive: The lead rapporteur of the Parliament’s JURI-committee, Lara Wolters, has included both aspects in the committee’s draft report. Fairtrade strongly recommends that the Parliament keep these references in its final position.
Living incomes are crucial for smallholder farmers, self-employed people, platform workers and others working under precarious conditions. If the decision makers exclude living incomes from the scope of the law, as now suggested by the Council, it would mean that a large group of people working in global value chains will be left in poverty.
Trading, procurement and pricing practices play a key role in the ability of suppliers to produce sustainably. Although the Council kept the respective wording in the recitals, it failed to include it into the draft due diligence obligations for companies. By doing so, it would allow companies to pass their codes of conduct on to their suppliers without addressing potentially harmful practices within their core operations. This effect is often referred to as ‘cascading of contractual clauses’.
In addition, we find it alarming that the Council has removed the application of support measures to SMEs in non-EU countries (recital 47), which had been included in the original proposal by the EU Commission.
“Without offering impactful support to supply chain actors outside the EU, human rights violations and environmental harm cannot be tackled effectively. It is frustrating to see that the Council has removed this passage.” stated Sophie Aujean, Fairtrade's Director of Global Advocacy.
The Council also debated about the role of third-party audits and certification. Fairtrade is satisfied that the position is not suggesting that a company’s HREDD responsibility and liability could be shifted away from the company. Fairtrade remains adamant that while Voluntary Sustainability Schemes such as Fairtrade can support companies in the implementation of several HREDD steps, they cannot replace HREDD or reduce the liability of companies. Fairtrade refers to its earlier position on this issue and welcomes the statement by the ISEAL Alliance.
Fairtrade welcomes that the Council’s position allocates a slightly stronger role to stakeholder engagement by including trade unions, civil society organisations and human rights defenders in its definition.
The clarification that company disengagement should be the last resort when attempts to prevent or mitigate adverse impacts were unsuccessful, is a needed addition. However, the introduced exception on when a company is not required to disengage, will open a problematic loophole.
Fairtrade looks forward to continue working with all co-legislators on the proposed due diligence directive. The EU should not miss this opportunity to strengthen itself with ambitious legislation, and enable companies to respect the human rights of everyone across global supply chains.