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EU's corporate due diligence directive to affect Taiwan: EETO official

12/11/2023 10:41 PM
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Minister without portfolio Lo Ping-cheng (center) and EETO trade section head Aleksandra Kozlowska (center right) pose for photo with other speakers at a forum featuring corporate due diligence in Taipei on Monday. Photo courtesy of Greenpeace East Asia.
Minister without portfolio Lo Ping-cheng (center) and EETO trade section head Aleksandra Kozlowska (center right) pose for photo with other speakers at a forum featuring corporate due diligence in Taipei on Monday. Photo courtesy of Greenpeace East Asia.

Taipei, Dec. 11 (CNA) Taiwanese companies were urged by experts Monday to put a higher priority on human rights and environmental practices in their supply chains as the European Union prepares to adopt a directive that will test corporate performance in those areas.

Still being negotiated but expected to be adopted in 2024, the EU's "Corporate Sustainability Due Diligence Directive" (CSDDD) would make demands on non-EU companies that do substantial amounts of business in Europe in those realms.

It would require companies to identify, bring to an end, prevent, mitigate and account for "negative human rights and environmental impacts in the companies's own operations, their subsidiaries and their value chains," according to the European Commission website.

Speaking at forum on "human-centered supply chains" in Taipei, Aleksandra Kozlowska, head of the trade section of the European Economic and Trade Office (EETO), said various voluntary schemes are in place to get companies to act responsibly.

Though they are based on international norms such as the Organisation for Economic Cooperation and Development's Guidelines for Multinational Enterprises and the United Nations' Guiding Principles on Business and Human Rights, because they are voluntary, companies only comply up to their "first-tier [suppliers] rather than the whole value chain," Kozlowska said.

But "according to the research, human rights or environmental violations do not happen in first-tier companies -- they happen down the value chain," she said.

With 67 percent of Taiwan's gross domestic product generated by exports, it needs to respond to global customers' demands, the EETO official said, and two areas of economic importance for Taiwan, the fisheries and semiconductor industries, will be subject to the CSDDD.

Non-EU companies that will be required to comply with the CSDDD are those having a net turnover of 150 million euros generated in the EU, or having a turnover of 40 million euros in the EU and 50 percent of their global revenue coming from "high-impact" sectors, such as textiles, agriculture and fishing, according to Kozlowska.

"So TSMC, for example, will have to look into the parts and components they may source globally, from economies or regions that do not have the best proven record on human rights production," she said.

Kozlowska particularly brought up fisheries activity apparently because one of the forum's organizers, Greenpeace East Asia, has highlighted the problem of forced labor on Taiwan's distant-water fishing boats.

Taiwan-caught fish was included in the List of Goods Produced by Child Labor or Forced Labor by the U.S. Department of Labor in 2020 and 2022, according to a Greenpeace East Asia statement.

It called on Taiwanese fleets and companies to comply with the EU's CSDDD or face sanctions by the EU on Taiwan-caught fish in the future.

Minister without Portfolio Lo Ping-cheng (羅秉成), responsible for improving Taiwan's human rights environment, said at the forum that Taiwan is making progress in this area.

He said the Taiwan-U.S. Initiative on 21st Century Trade, which is still being negotiated, will be structured along the lines of the labor protection-centered United States-Mexico-Canada Agreement (USMCA) that entered into force in 2020.

He also expected that the protection of human rights will increasingly become important parts of regional economic agreements, Lo said.

"This is a value, a common value between democratic partners that cannot be just lip service but has to be ensured with agreements," he said.

Lo said Taiwan started to require listed companies to publish a corporate social responsibility report in 2014 and included provisions on business ethics and social responsibility in the Company Act in 2018.

In 2022, the National Action Plan on Business and Human Rights was announced, which paralleled the U.N.'s Guiding Principles on Business and Human Rights.

That was followed by the Action Plan for Fisheries and Human Rights, Lo said, adding these action plans will be the guiding principles for amendments to existing laws.

(By Alison Hsiao)

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