copa-cogeca

The entity agrees with the need of a legal framework, although it admits it may be an additional burden for enterprises. It also considers the definition too vague and highlights the importance of proportionality. It also advocates for a blend of sector and/or thematic approaches and sees current legal status as appropriate.

The entity agrees with the need of a legal framework (question 2). It adds: ‘Although an EU legal framework might be needed, it will be very challenging to ensure a level playing field and avoid additional administrative burdens and additional requirements for farmers and their cooperatives, and in general for the European enterprises that in the current context need to recover from the economic and social crisis deriving from the pandemic.’ It argues (question 14) that the definition of due diligence duty is ‘too ... vague for a legal definition, with its limitations in terms of scope and effect. ... we would submit, on the importance of proportionality with respect to (a) discharging the primary duty to sustain an effective business service and (b) the need for any due diligence burden to be reasonable, “inherent risk-based, proportionate and context specific” to the entity and its board of directors’. In question 15, regarding content for corporate due diligence duty, the entity argues for ‘A blend of sector and/or thematic approaches could allow an appropriate and effective implementation. We emphasize that the current legal status must be considered as appropriate.’

The entity raises concerns about classifying their sectors as high risk, the impact of the legislation on cooperative enterprises, and calls for a due diligence that is, 'reasonable, inherent-risk based and proportionate'.

The entity states that: ‘In response to the current legislative proposal … we would like to reiterate our general position that due diligence needs to be reasonable, inherent-risk based and proportionate. … The scope of the directive raises specific concerns for the agri-food, fishery, and forestry sectors due to their classification as high-risk, and the reduced turnover and employee-on-average threshold means more companies in these sectors will be affected. … Copa and Cogeca regret that the proposal in its current form, and actions required of such companies to comply, will entail significant administrative burden and cost to companies falling within its scope’. Finally, ‘With specific regard to enterprises with cooperative statutes, Copa and Cogeca note that the cooperative business model differs from that of limited companies and listed companies. … In the agri-cooperative sector, many of the performance indicators are measured more on serving stakeholders … and less on corporate profit and revenues. Long-termism therefore tends to prevail over sole short-term economic objectives. Therefore, Copa and Cogeca call for due consideration of the impact (even indirect) of this legislation on cooperative enterprises’.

By endorsing this joint statement, the entity demonstrates support for the Omnibus Simplification Package designed to lower the level of ambition and delay the implementation of the Corporate Sustainability Due Diligence Directive.

The document states that 'The Corporate Sustainability Due Diligence Directive (“CS3D”), undoubtedly the flagship legislation adopted under the Green Deal, is particularly ambitious in terms of its scope thereby creating challenging and impactful new obligations for businesses with global value chains and in some instances rife unintended repercussions for the real economy in the EU and in third countries. ... We, the undersigned European associations representing companies and sectors impacted by the CS3D, welcome the European Commission’s intention to put administrative burden relief and simplification at the heart of its agenda'. It also calls for extending the implementation phase: 'Guidelines and implementing legislation should be adopted at least two years before compliance with legislation becomes mandatory or the transition period should be extended'.

The entity, through a joint business statement (JBS), shows support while showing some concerns on implementation.

The JBS indicates that: 'European business remains supportive of the objectives of the proposed directive ... and we urge co-legislators to work on a reasonable approach that is manageable for companies in practice'. It also states that 'we strongly call for full harmonization to ensure a level playing field and avoid further internal market fragmentation' and that 'legal clarity is paramount for the success of this initiative'.

It considers that all SMEs should be excluded and argues that the current legal status should be considered as appropriate.

In response to question 16 the entity considers that all SMEs should be excluded. It states that: ‘Company size, should be taken into consideration. ... Requirements for SMEs constitute anyway a disproportionate bureaucratic obligation. As the obligations will be above reporting obligations, the threshold should also be higher than that of the NFRD-threshold. ... The introduction of any duty or compliance framework around such a duty should, for very obvious reasons, be carefully considered in the context of the costs it is likely to precipitate’. In answer to question 15 it notes: ‘Only a sector and/or thematic approach allows an appropriate and effective implementation. We emphasize that the current legal status must be considered as appropriate’. It is not it clear argues for the inclusion of all sectors.

It disagrees with the consideration of its sectors as high-risk and the implications for reduced thresholds and how it affect companies in these. It also welcomes the exclusion of SMEs from the proposal, but still regrets that many will still be negatively impacted.

The statement indicates that: ‘The scope of the directive raises specific concerns for the agri-food, fishery, and forestry sectors due to their classification as high-risk, and the reduced turnover and employee-on-average threshold means more companies in these sectors will be affected’. It also states that: ‘As regards SMEs, actions related to due diligence are difficult to implement and so Copa and Cogeca welcome their exclusion from the scope of the proposal. … it must be noted that the proposal in its current form will nonetheless significantly affect SMEs … Therefore, the proposal in its current form will entail a massive burden on SMEs due to administrative and practical requirements for compliance. Overall, taking these factors into account, Copa and Cogeca regret that this proposal will, in reality, have a large negative impact on SMEs and so call for additional support measures that respond to our concerns'.

The JBS does not oppose the inclusion of SMEs, but calls for safeguards to protect them.

The JBS seem to show support to the inclusion of SMEs, although it reiterates that: "The European economy, included SMEs which will be impacted even if formally out of the scope, need a workable due diligence framework that is drafted in a balanced and proportionate way."

It is against sanctions at this stage, as too little is known of due diligence duty. However, no other mechanism is proposed.

It states (question 19a) that: ‘As yet we have insufficient detail of the scale, scope and actual practical manifestations of the proposed due diligence duty (i.e. the possible obligations), we might agree, in theoretical terms, with the principle that to be meaningful (effective) a duty should be complemented by a right of redress. However, since due diligence obligations in the field of sustainability are a recent development at this stage and based on the information made available, the introduction of these obligations should be geared towards gaining experience and guidelines should be issued instead of sanctions’.

The entity regrets and rejects the inclusion of sanctions and civil liability, although would accept enforncement based on sanctions: 'on clear criteria that are fair, measurable and comprehensible'.

The entity indicates that, ‘the introduction of these obligations should be geared towards gaining experience and guidelines should be issued instead of sanctions. Therefore, Copa and Cogeca regret the inclusion of sanctions (Article 20) and civil liability (Article 22), and call for these aspects of the proposal to be revised with guidelines. A duty of effort measured against an adequate due diligence management system, with sanctions based on clear criteria that are fair, measurable and comprehensible could be an option’.

It agrees to some extent on both a requirement to set up procedures to ensure risks on stakeholders are identified, prevented and addressed (but it should be proportionate) and a legal requirement for directors to manage the risks for the company in relation to stakeholders and their interests in the long run.

In its response to question 7 on whether corporate directors should be required to set up procedures to ensure risks on stakeholders are identified, prevented and addressed, it agrees 'to some extent' and points out that: ‘The set up and operation of any such procedures and targets must be proportionate relative to the existing governance obligations on directors of cooperative enterprises.’ Similarly, in response to question 6, agrees 'to some extent' to a legal requirement for directors to manage the risks for the company in relation to stakeholders and their interests in the long run. No further explanation is given.

The JBS rejects including directors' duties in the Directive.

The JBS states that: 'regulating directors' duties does not belong in a due diligence framework. It will have negative side-effects, including the disruption of existing, well-established governance models of the member states, without added value to the ability of companies to apply effective due diligence'.

The entity doesn't consider this a suitable option as enforcement mechanism.

Question 19a asks about enforcement mechanisms through a multiple-choice format, one of which is 'judicial enforcement with liability and compensation in case of harm caused by not fulfilling the due diligence obligations'. The entity did not select this as one of its preferred measures. It adds: ‘since due diligence obligations in the field of sustainability are a recent development at this stage and based on the information made available, the introduction of these obligations should be geared towards gaining experience and guidelines should be issued instead of sanctions’.

The entity is against liability provisions.

It indicates that, 'Since due diligence obligations in the field of sustainability are a recent development at this stage and based on the information made available, the introduction of these obligations should be geared towards gaining experience and guidelines should be issued instead of sanctions. Therefore, Copa and Cogeca regret the inclusion of sanctions (Article 20) and civil liability (Article 22)'.

Although the joint statement does not oppose to legal liability, it calls for a more balanced approach

The joint statement indicates that 'Legal liability provisions, including sanctions, need to be balanced, follow legal traditions around breach-damage-causality and truly incorporate the widely accepted principle that due diligence is first and foremost an obligation of means. The complexity of value chains cannot be underestimated when analysing impacts which can have multiple competing causes, players and dynamics. Therefore, companies cannot be made liable for damages they have not -intentionally or negligently - caused'.

It agrees with the need of a legal framework, while indicating it can be a burden for enterprises. It argues for a blend of sector and/or thematic approaches and that the current legal status must be considered as appropriate and that the due diligence duty definition provided is ‘vague'.

The entity agrees that a legal framework is needed (question 2) while highlighting that: ‘it will be very challenging to ensure a level playing field and avoid additional administrative burdens and additional requirements for farmers and their cooperatives'. It indicates: ‘A blend of sector and/or thematic approaches could allow an appropriate and effective implementation. We emphasize that the current legal status must be considered as appropriate’ (question 15). The entity argues, in question 14, that due diligence duty definition is: ‘vague for a legal definition, with its limitations in terms of scope and effect’.

The entity shows concern about the definitions of some terms that affect the practical implementation of due diligence duty. It also calls for a risk-based approach.

The entity states that, 'we would like to reiterate our general position that due diligence needs to be reasonable, inherent-risk based and proportionate’. It also indicates that, ‘We are concerned that key terms are not sufficiently well-defined and call for clear definitions. For example, the current definition for “value chain”, set out in recital 18, is very far-reaching and raises questions regarding practical implementation. Here, it is not clear how companies can ensure that human rights, environmental and climate-related due diligence requirements are met downstream if they have little to no legal or factual ability to influence the downstream sector. Furthermore, Copa and Cogeca also call for a further clarification of the meaning of, “established business relationship”, for example, specifying a minimum purchasing volume percentage, evidence of consistent business activities over the past three years and existence of framework contracts.

The joint statement argues that companies can't focus in all elements of their value chains. It also calls for a reduction of obligations

The joint statement states that 'To ensure that the future Directive is truly consistent with a risk-based approach, widely supported in international instruments in the UN and OECD, companies cannot be expected to focus on every single element of their value chains. The ability to prioritise the identification of and action to address the most salient risks is a necessity that must have a crucial impact on compliance with the due diligence process and its consequences'. It also points out that 'we call for revisiting and shortening the annex to only include those conventions and treaties that create concrete obligations on companies so not to mix up their roles with the one of states'.

The signatories call for avoid the extension of the scope of CS3D during implementation and introduction of guidance on model contract clauses.

The statement indicates that 'competitiveness assessment that leads to the new simplification should ensure that upcoming implementing legislation and guidance … are co-developed to address gaps or excessively burdensome provisions, rather than introduce additional layers of complexity or de facto extend the scope of the CS3D'.

The entity agrees 'to some extent' with a legal requirement (for directors) to identify stakeholders and their interests and considers all stakeholders presented as relevant.

The entity disagrees, 'to some extent', with a legal requirement (for directors) to identify stakeholders and their interests, as per question 6. It does not elaborate on its response. It considers that all stakeholders presented in the consultation are relevant (question 5).

Although the entity agrees to some extent to the question of whether there should be a legal requirement for directors to establish mechanisms for engaging with stakeholders in relation to due diligence duty, it states that a cooperative, the core service-using shareholder interest, should be the dominant driver in the formulation of that strategy.

In response to question 20a of the consultation, the entity agrees 'to some extent' adding the following explanation: ‘we would robustly defend the idea that in a cooperative the core service-using shareholder interest ... should be the dominant driver in the formulation of that strategy. Those interests and the active contribution ... of those holding those interests should both author the strategy and mandate the board of directors to implement it. Consultation with and consideration of the wide stakeholder community is both necessary and sensible for sustaining the service but it should not undermine or distract from member design of the strategy. Finally we would contend that cooperative enterprises and their boards of directors engage, by definition, in a consideration of and consultation with a wider stakeholder pool. Food producing member shareholders, supply chain operators and regulatory bodies are quite frequently consulted’.

In its response to question 6, the entity agrees 'to some extent', with a legal requirement for directors to manage risks for the company in relation to stakeholders.

In its response to question 6, the entity agrees 'to some extent' with a legal requirement for directors to manage risks for the company in relation to stakeholders. It does not elaborate on its response.