30 May 2023

EuropeanIssuers joint statement on Corporate Sustainability Due Diligence Directive (CS3D)

EuropeanIssuers, in collaboration with 35 European associations, has issued a joint statement urging the business community to refocus its attention on the objectives of the European Commission's proposed directive on corporate sustainability due diligence (CS3D).

The joint statement calls for balance and proportionality of the EU due diligence framework to enable and guide businesses in taking necessary steps towards a more sustainable transition.

The joint statement intends to intervene to solidify the business community’s alliance in advocating for a workable due diligence framework drafted in an inclusive, reasonable, and balanced way. The aim is to avoid any room for legal uncertainty and fragmentation, or any other element that would hinder European companies’ possibility of favourably contributing to the sustainable transition.

Thereafter, this document intends to put forth several recommendations and concerns to enhance the benefits of the corporate sustainability due diligence proposal.

First and foremost, the business community calls for a full harmonisation of the due diligence framework across the EU. This requirement is essential to prevent fragmentation of the Single Market and ensure a level playing field, while safeguarding the accomplishments of the legislation's goals.

Furthermore, the joint statement emphasizes the need for a realistic and manageable approach, recognizing that focusing on every aspect of the value chain is neither practical nor feasible. Instead, companies should have the flexibility to prioritize the most significant risks and take appropriate actions to cease, prevent, or mitigate identified adverse impacts in accordance with a risk-based approach.

In addition, the document also highlights the need for a better balancing of legal liability provisions, ensuring that due diligence is an obligation of means, and that companies cannot be made liable for damages they didn’t cause or directly contributed to.

Following the necessity for more proportionate legal liability provisions, the joint statement suggests the adoption of a clear guidance embedded in legal clarity as a necessity for the initiative’s accomplishment. This caveat has been determined to ensure the use of internationally recognized definitions, aligning climate objectives with the Corporate Sustainability Reporting Directive. In addition, the associations advocate in the annex revision to focus on conventions and treaties that impose obligations on companies. Timely guidance is necessary to prevent complexity for both companies and competent authorities in complying with the rules.

As a united front, the community encourages the diversification between stakeholder engagement, which is crucial for effective due diligence and unrestricted litigation powers to any entity. Such broad powers could lead to the exploitation of lawsuits, ultimately preventing victims from seeking justice or appointing representatives to act on their behalf.

 

In conclusion, the joint statement asserts that the regulation of directors' duties is unnecessary within the proposed due diligence framework. Such regulation would disrupt established governance models of member states and potentially result in adverse consequences.

EuropeanIssuers remains committed to representing the views of issuers across Europe throughout the ongoing process of developing a robust and effective due diligence framework aimed at empowering the community to achieve the sustainable transition.

 

To view the join statement, please click here

European Issuers

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