Ministers Petteri Orpo (left), Elina Valtonen, Riikka Purra and Sari Multala attended the opening ceremony of the new parliamentary session in Helsinki on Wednesday, 7 February 2024. Orpo’s government announced last week it is considering abstaining from voting on the long-discussed corporate responsibility directive of the EU, a move that is counted as a vote against under the rules of the EU Council. The announcement has drawn criticism from both non-governmental organisations and companies, reports Helsingin Sanomat. (Markku Ulander – Lehtikuva)

Domestic
Tools
Typography

THE FINNISH GOVERNMENT is prepared to shrug off criticism from companies and non-governmental organisations and torpedo the corporate responsibility directive of the European Union, reports Helsingin Sanomat.

The Parliament’s Grand Committee on Thursday approved the position adopted by the government with the backing of votes from the four ruling parties and the Centre.

The Green League, Left Alliance and Social Democrats submitted a dissenting opinion to the committee report.

The ruling parties are of the opinion that the extension of class action rights to environmental organisations and trade unions is sufficient grounds for abstaining from voting in the decisive meeting of the EU Council on Friday, a move that is counted as a vote against under the rules of the EU Council.

The directive would obligate corporations operating on the continent to determine and respond to environment and human rights-related risks in their supply chain.

Finnish non-governmental organisations, as well as some companies, have criticised the decision to effectively vote against the directive. They warned earlier this week that the government is about to undermine years of work to enhance the responsibility of supply chains on flimsy grounds. The government is concerned especially about the clause that would enable a group of private individuals to authorise a trade union or environmental organisation to take legal action on their behalf against a company allegedly violating their responsibility obligations.

An agreement on the contents of the directive was reached at the end of last year after two years of negotiations. Members of the 27-country bloc are set to approve the agreement on Friday, but the Finnish government announced last week it could abstain from voting for the directive as part of “a larger group of countries”.

The possibility of torpedoing the directive has stirred up concerns among some companies, according to Kimmo Lipponen, the CEO at Finnish Business & Society (FIBS). The corporate responsibility network has roughly 400 member companies, including some of the largest in Finland.

EU-level regulation on responsibility efforts is welcomed by companies because it would make it easier to operate in the internal market and level the playing field for competition, Lipponen explained to Helsingin Sanomat on Wednesday. The responsibility directive would also apply to large foreign corporations operating in the EU.

“Companies rarely want regulation, but this thing is important,” he said. “This is a crazy situation.”

Both FIBS and the Consumers’ Union of Finland believe the Finnish government should support the directive, the latter arguing that toppling it would contradict the government programme.

“The directive is needed, wanted and long-devised improvement also to the position of consumers in markets. Finland’s current plan to torpedo the proposal is shameful in light of its reputation as a frontrunner in responsibility,” commented Juha Beurling-Pomoell, the secretary general of the Consumers’ Union.

The Finnish government argued last week that the proposed expansion of class action rights is extremely problematic from the viewpoint of the legal system. In Finland, class actions are currently only possible in consumer-related cases.

FIBS contrastively gauged in its statement that expanded class-action rights are a useful addition to the directive.

“If you look at the global south, where the risk of human rights violations is higher, this kind of class action rights are the only way to get justice,” Lipponen stated to Helgingin Sanomat.

The Finnish Corporate Responsibility Law Association agrees, estimating that the government position on the question of class action rights is disproportional.

“It may also be in the interest of companies and the legal system that cases are brought as class actions instead of several independent claims. Class actions are therefore a justified element of the directive, and their incorporation into national legislation is not impossible,” the association argued in its statement.

Juho Romakkaniemi, the director of Finland Chamber of Commerce, indicated to Helsingin Sanomat that the interest group changed its position on the responsibility directive because the expanded class action rights were a late addition that was made without an impact assessment.

He described the rights as a “major issue of the philosophy of law”: “It grants organisations really peculiar judicial standing. It’s such a big concern that we don’t want the directive to come into effect in this form.”

The directive is at genuine risk of falling apart. Also Germany is intent on abstaining, while Estonia, Italy and Sweden are reportedly weighing up their position. Should these countries join the group of abstentions, the opposing minority would be large enough to prevent the directive from coming into effect, according to Helsingin Sanomat.

Aleksi Teivainen – HT

Partners