Fédération Bancaire Française

The entity advocates for excluding cooperative banks from the scope

It states that: 'As cooperatives are not in the scope of the draft directive (art.3, a, i), we are very much surprised that the cooperative banks seem to be in the scope (art 3, a, IV: “a regulated financial undertaking, regardless of its legal form, which is a credit institution…”). We believe that cooperative banks shouldn’t be in the scope, as it is the case in the French 2017 law regarding the duty of care'.

The entity advocates for sanctions to be implemented at the EU level

The entity states that :'we would like to harmonise sanctions at EU level to avoid divergent treatment from one country to another (different sanctions depending on the Member State dealing with the case).'

The entity is against directors' (supervisory board) having to take responsibility, as some obligations are 'conceivable only for managers'. It also seems to reject the notion of obligation to avoid human rights abuses.

The entity states that ' The draft proposal refers to directors without distinguishing between members of the board of directors and executive directors. Worse, the French translation of the proposal only refers to the board members, while some obligations are conceivable only for managers. Yet, as regards French law, the board of directors shall determine company business strategy and shall ensure the implementation thereof. Articles 25 and 26 would thus benefit from review. Director’s duty of care goes much too far, as it implies for the board of directors to “take into account” the “consequences of its decisions for sustainability matters”, where the board of directors should only be asked to “take into consideration sustainability issues of company’s activity”, so as to avoid being in a deadlock. In any case duty of care shall be an obligation of mean in order to be correctly linked to the duty to act in the best interest of the company. Last but not least, so as to avoid jeopardizing the necessary legal certainty, non-compliance with article 25 shall not lead to the nullity of any act of the company whatsoever'.

The entity consideres that cooperative banks should be excluded from the scope of the legislation, and that value chain obligations should be limited to direct suppliers and contractors. It also calls for the exclusion of certain client-facing financial services.

The entity states that: '‘we propose to delete the notion of “indirect” relationships to focus on “direct” relationships, that are generally materialised by a contract. Having a contractual relationship would indeed ease the implementation of the directive’s various requirements …. We understand that for financial institutions the “value chain” is limited to “the activities of the clients receiving such loan, credit, and other financial services and of other companies belonging to the same group whose activities are linked to the contract in question” (article 3). In addition, this value chain does not cover households and natural persons not acting in a professional or business capacity and SMEs receiving loan, credit, financing, insurance, or reinsurance. Nevertheless, it is important to keep in mind: 1) That banks can be confronted to the specific case of general-purpose loan. In this case we don’t know for which activities the financing will be used and which specific subsidiaries activities would be involved. 2) That the particular situation and regulation of the financial sector should be further reflected as this sector is already heavily regulated, for instance regarding AML or ESG risks. The wide range and large number of business relationships within the financial sector would make it disproportionately burdensome to apply the Directive to the interbank market and securities clearing and settlement which should be excluded from the scope of the directive'.

The entity is against the requirement of code of conduct being implemented through business partners, although does not explicitly refer to clauses related to human rights harms.

The entity states that: 'We believe that each company should follow its own code of conduct, otherwise creating new business relationships may be complicated as companies will have to establish a compliance system with respect to hundreds of business partners. Moreover, in the case of financial institutions, how to manage a situation where several parties require the financial institution to comply with code of conducts that clash with banking rules. Each company should make sure that they have a policy and that they follow it. We believe that the directive should only set general principles that companies should implement their own policies and procedures'

The entity seems to reject the requirement of obligation of stakeholder identification.

It states the why and how of taking into account the opinion of civil society organizations, which we understand are not necessarily stakeholders? How do we identify them? How is article 26.2 feasible, in practical terms?'.

The entity is against directors (supervisory board) having to always take responsibility, as some obligations are 'conceivable only for managers'. It also seems to reject the requirement of an obligation to hold stakeholder consultations.

It states that: 'The draft proposal refers to directors without distinguishing between members of the board of directors and executive directors. Worse, the French translation of the proposal only refers to the board members, while some obligations are conceivable only for managers. Yet, as regards French law, the board of directors shall determine company business strategy and shall ensure the implementation thereof'. It also points out that: ' Article 26 questions in a number of areas. For example, how can stakeholders’ views be taken into account in practice, and what about their possible side effects on companies? Why and how taking into account the opinion of civil society organizations, which we understand are not necessarily stakeholders? How do we identify them? How is article 26.2 feasible, in practical terms?'.