MBB Brussels Update | February 2022

MBB Brussels Update | February 2022

Corporate Sustainability Due Diligence DirectiveCorporate Sustainability Due Diligence Directive (CSDD)

The European Commission published the CSDD with the aim of fostering sustainable and responsible corporate behaviour that considers human rights and the environment in both of the companies’ operations as well as their corporate governance. This Directive will apply to companies that employ more than 500 people and with a worldwide turnover of Eur150 million. It will also apply to companies in high-impact sectors such as agriculture and food, mining and textiles, if the company employs more than 250 people and has a turnover exceeding Eur40 million. Furthermore, it includes requirements for regulated financial undertakings.

SMEs are not directly in the scope of the proposal, but they are expected to be impacted nonetheless if they form part of a wider supply chain of larger companies that would require to collect information for the purpose of their reporting.

Due Diligence

Companies will be required to integrate due diligence into their policies that include:

  • description of the company’s approach, including in the long term, to due diligence;
  • a code of conduct describing rules and principles to be followed by the company’s employees and subsidiaries;
  • a description of the processes put in place to implement due diligence, including the measures taken to verify compliance with the code of conduct and to extend its application to established business relationships.

Moreover, they will have to identify actual or potential adverse impacts on human rights and the environmental arising from their own operations or those of their subsidiaries and take appropriate measures. They must prevent and mitigate the potential adverse impacts and bring to an end or minimise their extent; establish and maintain a complaints procedure from individual persons, trade unions, as well as NGOs; monitor the effectiveness of their due diligence policy and measures; and carry out periodic assessments (at least every 12 months) of operations and measures, including subsidiaries.

Directors’ Duties

The company’s business strategy must take into account due diligence also when setting Directors’ variable remuneration.

Civil Liability and Sanctions

The Directive provides information on how Member States should deal with victims’ compensation for damages resulting from failure to comply with due diligence requirements. Member States are also tasked with imposing effective, proportionate and dissuasive sanctions, including fines and compliance orders.

For more information, see here.


European Commission Communication on Tourism Transition Pathway

The Tourism Transition Pathway emerges from the 2020 Industrial Strategy Update, which looked into creating sectoral ecosystems to accelerate the green and digital transition and to create a more resilient European economy towards 2030 and beyond. The strategy includes a 27-point action plan, with the most prominent being to (i) invest in circularity and reduce energy, (ii) enhance data sharing practices (notably by platform economy), and (iii) invest in skills. The MBB had consulted the Chamber’s Tourism Committee and MHRA in the process of formulating feedback to the Commission’s consultation last year.

The full Communication can be viewed here. (The 27-point action plan can be seen from pages 37-46)


European Commission proposal for a Data Act

In line with the 2030 Digital objectives, the Commission has proposed new rules on use and access to data generated in the EU. It expects that as a result of this initiative there will be a more competitive data market, more innovative services and competitive prices for aftermarket services. Some of the highlights include access to users of connected devices to gain access to data generated by them; protection of SMEs from unfair contractual terms imposed by parties significantly stronger also by developing model contractual terms; provides the means for public sector bodies to access and use data held by the private sector that is necessary in exceptional circumstances (such as natural disasters); and allowing customers to switch data-processing services providers with safeguards against unlawful data transfer.

More information in this factsheet provided by the European Commission.


European Commission proposal for a Chips Act

Another flagship proposal published in February is the EU Chips Act, which is in line with the new policy of working towards Strategic Autonomy. This is particularly relevant for the EU’s technological leadership, whereby it needs to ensure a security of supply of semiconductor technologies and production. Recently, EU industry suffered from global semiconductor shortages ranging from the manufacturing of cars to healthcare devices. The current geopolitical context makes it all more complex.

The package is made up of several initiatives, which include: (i) The Chips for Europe Initiative that will look to strengthen existing research, development and innovation, and to ensure the deployment of advanced semi-conductor tools, and develop an in-depth understanding of the semi-conductor ecosystem and value chain. It also includes (ii) a new framework to ensure security of supply by attracting investments and enhanced production capacities. There will also (iii) be a coordination mechanism introduced between EU Member States and the Commission to monitor the supply of semiconductors to estimate demand and anticipate shortages.

For more information, please see here.


Council adopts position on Corporate Sustainable Reporting (CSRD)

As expected, Member States adopted a general approach on the CSRD at the Competitiveness Council on 24 February. This did not change much from the European Commission proposal. The CSRD revises the non-financial reporting directive and has been extended to cover all large companies (250+ employees) as well as SMEs listed on regulated markets. Previously, the threshold applied for companies employing more than 500 people. The new Directive will require a certification for sustainability reporting following more detailed and standardised requirements on the information that will be required to be published in a dedicated section of companies’ management reports. The standards will be developed by an independent agency EFFRAG, which is also responsible to establish financial reporting standards.

The file in the European Parliament is also progressing and a vote in the Legal Affairs Committee is planned for the 16th March. If the file is adopted, inter-institutional negotiations will follow and the French Presidency has already indicated its intention to adopt an agreement by June. The CSRD is intended to become applicable as from 2024.


New European Commission Consultations

Package Travel Directive: The European Commission launched a public consultation ahead of the proposal for a Revision of the Package Travel Directive that is expected in Q4 this year. The main aims of the revision will be to update the Directive to prepare for situations of mass cancellations and request for refunds as happened recently following the insolvency of Thomas Cook as well as at the start of the global pandemic. The MBB has been following developments and already submitted first reactions following the publication of the inception impact assessment last year. We will discuss with the Malta Chamber’s Tourism Committee and MHRA to submit feedback to this consultation whose deadline is 10th May.



Winter Package: The European Commission published the Winter 2022 Economic Forecast which estimates a consolidation of 4% growth in 2022 following an economic rebound of 5.3% growth in 2021. For more information, please see here.

For more information or to submit your feedback, contact the Malta Business Bureau’s Brussels Office on infobrussels@mbb.org.mt