Position on the Corporate Sustainability Due Diligence Directive

We welcome the Commission’s proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD) and its important contribution to addressing adverse impacts on human rights and the environment. FESE hopes that the Directive will also ultimately succeed in creating a level playing field within the single market, while avoiding fragmentation and reducing legal uncertainty.

We support the inclusion of all large companies in the scope, regardless of whether they are listed or not, as well as the exclusion of SMEs, given the high financial and administrative burden that would otherwise be imposed on them. While third-country companies should be included to achieve a level playing field, the rules should be proportionate. In particular, FESE would support limiting the due diligence obligations to the entities’ supply chain of products offered in the EU. Furthermore, it would be important to allow the consolidation of the subsidiaries’ due diligence requirements at the “parent undertaking” level and to put the focus on “supply chains”, rather than "value chains", to avoid confusion as to the scope of liability.

Consistency with international standards and with the growing body of sectoral legislation would be essential to ensure legal clarity and avoid overlapping requirements. However, in terms of supervision and enforcement, FESE would very much welcome the creation of the European Network of Supervisory Authorities, which could play a key role in ensuring a consistent implementation of national provisions and greater coordination between National Supervisory Authorities.

Other considerations developed in FESE’s position paper that would also merit attention are, among others:

  • the need to exclude non-executive directors from the duty of care requirements or to direct them to the company instead
  • the preference for remuneration provisions to remain in national legislation
  • greater clarity on the requirements of transition plans and their interaction with other legislative files
  • the suggestion to delete the provisions on civil liability