Paul Murphy warns against watering down EU sustainability directive

Thanks a lot, Chair. It is a question about the Corporate Sustainability Due Diligence Directive. It is a potentially very important piece of European legislation which would make corporations responsible for human rights abuses, labour rights abuses, environmental abuses, consumer rights abuses throughout their supply chain. Unfortunately, it has been subject to intensive lobbying by big corporations to try to water it down, to try and make it ineffective. Most recently, they have succeeded in a series of watering down for the negotiating position of the European Council in terms of the partial and effective exclusion of the financial sector. Thank you, Deputy. As you know, Ireland has been supportive of the objective of the proposed directive on the Corporate Sustainability Due Diligence Directive, which will play a significant role in promoting responsible business conduct. It is a complex proposal with far-reaching implications for companies and stakeholders in relation to the prevention of adverse human rights and environmental impacts. An EU-wide framework is best placed to both support the functioning of the single market and to influence respect for human rights and the environment beyond the EU. While I welcome the progress made and the speed at which this is being accomplished, I had greater ambition for the proposal in a number of areas, including favouring a value chain-based approach and recognition of the fact that adverse human rights and environmental impacts can occur through the value chain, and also a greater focus within the directive on the gender aspects of the proposal as women can suffer more disproportionately from the consequences of the adverse impacts. I raised these concerns at the Competitiveness Council meeting on 1 December. Specifically in relation to the deputy's query, an issue rose in the final text that came before Council proposing that discretion be provided to Member States regarding the directive's applicability to the financial sector. Ireland considers that it should apply to relevant companies across all sectors of the economy, including regulated financial undertakings. Furthermore, Ireland wants a harmonised approach on this issue to ensure policy coherence and to avoid the risk of fragmentation within the general market. Accordingly, Ireland did not support the adoption of a general approach on the proposal. However, a general approach is now being adopted. The process now moves to the trilogue negotiations between the Council, the European Commission and the European Parliament. I understand that a final directive may not emerge until the latter part of 2023 following the conclusion of the trilogue process. Therefore, it is still premature to focus on implementation of the proposal, including any policy choices which might arise from Member States in advance of the Trilogue with the Council and Commission, during which further debate will continue to be had on such matters. I can assure the Deputy I will be keeping a close eye on the trilogue process. Thank you, Minister. It is good to hear that the Government opposed the watering down that happened at the latest European Council meeting. I would ask whether it was accurate that at an earlier stage in the negotiations, as reported by Reuters, the Irish Government indicated that they wanted to exclude asset managers and institutional investors from the scope and that the Government said in a submission that it could not signal an agreement to include financial undertakings. The lead from Oxfam on this has commented about the effective exclusion, leaving it up to the Member States whether to include the financial sector or not. The consequence would be that the financial sector can continue to bankroll human rights violations and damage to the planet without being held accountable, as it remains up to each European country to decide whether they want to make banks and other financial players clean up business. You can have huge investments in fossil fuels, by private investors in destruction of Indigenous people's living conditions, their environment, and these people can be excluded now by Member States. Mr. Prime Minister, I can assure you that we did not support the overall adoption and we raised concerns about the financial sector. There was an issue during the early stages of the negotiation that there were different treatments within this directive from other directives. We did want to support consistency in various directives around that. We also had concern about the inclusion within the scope of national security and social security schemes and institutions for occupational retirement provisions. Those concerns were superseded by our overall concerns about the ability of Member States to exclude financial institutions. That was highlighted in your remarks from Oxfam. I hope that the European Parliament will adopt a strong position and, in Trilog, this will be strengthened again and the financial sector will be brought back in. If not, it creates the danger, as you pointed out yourself, of a patchwork of different regulations in different countries, which is against the whole purpose of the European Union. It also creates pressure for a race to the bottom because investors may locate in countries where they are not going to be held responsible for what is happening lower down the value chain. But let us say that that does not happen. Let us say that the European Council position as current in relation to the financial sector is what is ultimately adopted. In that case, can the Irish Government give a commitment that it will include the financial sector here, that it will not take the option which will be open or which may be open to say we are not going to include the financial sector, but that Ireland would create a good example by saying we are going for a high level of responsibility and that finance will be included in this country. The Trilog Process Deputy is going to be quite challenging and Deputy our MEP Barry Andrews is working very hard on this within the Department. He has kept in close contact with my officials and myself in relation to this. I do not want to comment on what the potential outcome of that process may be. I am not going to speculate on that, but I think we have laid our cards very strongly on the table at European Council level around this issue.