Ceemet – European Tech & Industry Employers

While recognising the principle of HRDD, the entity challenges the broad legal obligations, citing excessive administrative burdens, vague concepts, and risks of inconsistent application across Member States.

The document states that: 'Ceemet acknowledges that companies have a responsibility to take social, environmental and human right issues into account ... Yet this should be reached by a proposal which is workable in practice and does not cause an overwhelming amount of administrative and financial burden on companies'. Also: 'The proposal entails a major risk of fragmentation of legislation within the EU as there is too much leeway for Member States to differently interpret the text of the Directive ... Ceemet strongly advocates for the text of the Directive to be clarified so that there are no discrepancies between the transposition laws of the Member States'.

The entity considers that the proposal is not workable in practice and will cause an overwhelming amount of financial and administrative burden.

The statement indicates that: 'While Ceemet agrees to the aim of the proposal for companies to contribute to sustainable development and the sustainability transition of economies and societies, we believe that this should be reached by a proposal which is workable in practice and does not cause an overwhelming amount of administrative and financial burden on companies'.

The statement supports the approach to, 'alleviate these burdens', including due diligence obligations.

The statement indicates that: ‘We, the signatories, wholeheartedly support this approach to revitalise Europe's competitiveness and call for even more ambitious action to obtain substantial relief for companies. Indeed, in recent years, numerous pieces of overlapping and highly prescriptive legislation concerning due diligence and reporting have been enacted at the European level, creating a significant bureaucratic burden for our companies … The current due diligence and reporting obligations pose unnecessary difficulties for everyone affected, …. We therefore need bold measures to alleviate these burdens’.

The entity: 'calls on the European Parliament to consider the strong negative impact that this legislation will have on companies and allow sensible amendments in this respect to be proposed in plenary'.

The entity states that: ‘The Directive and its extensive requirements will inevitably have a critical impact on European based companies, their operations and supply chains, as well as on their global competitiveness. Ceemet strongly regrets the EP’s position on the scope of the Directive. The CS3D will cause an overwhelming amount of new financial and administrative burden on companies. This is not workable in practice, not even for large companies. As corollary of the statement, … Ceemet calls on the European Parliament to consider the strong negative impact that this legislation will have on companies and allow sensible amendments in this respect to be proposed in plenary'.

The entity doesn't consider that a legal framework on supply chains is needed and advocates for asking companies to follow existing guidelines and standards.

The entity disagrees with the need of a legal framework (question 2): 'it should be enough to focus on asking companies to follow existing guidelines and standards'. It adds that: 'Ceemet believes that the European Commission should not propose any additional mandatory due diligence legislation at this point’. In answer to question 15 it notes: ‘The European Commission should not come up with a proposal on mandatory due diligence. European business already expressly recognises its responsibility for human rights. The plan for a law on the supply chain for all companies does not seem workable in practice. Nonetheless, any EU proposal should be in line with the UN Guiding Principles on Business and Human Rights.’

The entity calls for full harmonisation

The entity states that 'The most important element of the proposal should be full harmonisation. This is necessary to avoid fragmentation of the EU single market and ensure a level playing field. This can be achieved by using, for instance, an “internal market clause”. If the EU wishes its model to be used as a reference elsewhere in the world, it cannot rely on the limited harmonisation provided by the directive that would potentially lead to 27 different frameworks'.

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'.

The entity call for a higher threshold that the only already applied in the proposal for Directive.

The entity states that: ‘The CS3D … is not workable in practice, not even for large companies. Yet for smaller companies, that are already strongly affected by the trickle-down effect, it will be impossible to implement these extensive requirements. These companies will have to shift the majority of their time and resources from their core corporate activities to carrying out these due diligence requirements. The Directive will only work if it applies to companies which have at least over 1000 employees’.

The entity advocates for higher thresholds and SME exclusion, opposing universal application. It also calls for limiting coverage to risk-related parts in cases of high-impact sectors identified by the law.

The entity states the following: ‘Even for big companies it will be a challenge to fulfil the additional obligations in this regard. Therefore, Ceemet is of the opinion that only companies that employ more than 1,000 employees should be considered to fall under the scope of the Directive, rather than companies that employ over 500 employees … although we appreciate that Small and Medium Enterprises are in principle out of the scope of the Directive, we note that the SMEs will in any case be highly impacted … Ceemet therefore proposes to limit the obligation to carry out due diligence to the first tier of the companies’ supply chain located outside of the EU. This would ensure that SMEs within the EU are really exempted from the scope’. In addition, it states, ‘Ceemet proposes to explicitly reference the list of the applicable code of the sector in the text of the Directive, limiting the list to specific parts of sectors which represent a risk. As part of the Commission’s annual risk assessment should list relevant sectors and third countries which represent high-impact sectors'.

There should not be a mandatory due diligence and all SMEs should be excluded. It does not refer to a horizontal approach, emphasising that the EC should not come up with a proposal on mandatory due diligence

The entity responded to question 16 options of excluding all SMEs and adds that: 'SMEs should be excluded from any mandatory due diligence obligations (which can only apply to large companies, such as companies with 5000 or more employees). They are the backbone of Europe’s economy and their limited possibilities must be taken into account’.

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."

Although the entity chooses 'Supervision by competent national authorities based on complaints (and/or reporting, where relevant) about non-compliance with setting up and implementing due diligence measures, etc. with effective sanctions (such as for example fines)', it explains that the Commission should not come up with a proposal on mandatory due diligence.

As per its response to question 19a on enforcement mechanisms, the entity selects the option (multiple choice) ‘Supervision by competent national authorities based on complaints (and/or reporting, where relevant) about non-compliance with setting up and implementing due diligence measures, etc. with effective sanctions (such as for example fines)’. However, in its explanation, it adds: ‘The European Commission should not come up with a proposal on mandatory due diligence. In case an EU level proposal comes out .... We underline that this must be based on the concepts of ‘reasonable effort’, ‘proportionate and context specific’ and ‘risk-based’ due diligence’.

The entity does not consider necessary to regulate directors' duties.

The entity states that: 'Regulating directors’ duties is unnecessary to reach the objectives of the proposal and does not belong in a due diligence framework. It will have negative side-effects, e.g. interfering with national company law systems and creating legal uncertainty, without added value to the ability of companies to apply effective due diligence'.

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 believes that remediation across a large range of operations and suppliers throughout the value chain would incur costs at a detrimental level.

In answer to question 25 on impacts of implementing measures, the entity indicates: ‘unreasonable requirements on companies for detailed due diligence efforts and responsibility for remediation across a large range of operations and suppliers throughout the value chain would incur costs at a detrimental level’.

The entity opposes broad civil liability and advocates for a narrower application.

The statement indicates that: ‘Article 22 on civil liability, as proposed by the European Commission, fundamentally compromises the need for legal certainty as it risks to open the door for abusive and excessive litigation. It should be noted that companies can only be liable for damages which they directly cause or at least that they can directly control or influence. … The civil liability of one company should end where the actions of a legally independent third party begin. At most, Ceemet believes that it could be acceptable to establish civil liability for companies as regards their direct suppliers. Furthermore, the traditional civil liability rules should apply in this respect and companies can therefore only be liable if (i) they have not carried out due diligence measures at all, (ii) there is damage and (iii) there is a causal link between these two conditions’.

The entity calls for a removal of Article 22 on civil liability.

The entity states that: 'In order to mitigate the harsh consequences in terms of legal uncertainty, article 22 on civil liability should be deleted'.

The Company 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 company did not select this as one of its preferred measures.

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

The entity states that: 'Legal liability provisions need to be balanced and truly incorporate the widely accepted principle that due diligence is first and foremost an obligation of means and that companies cannot be made liable for damages they have not caused or directly contributed to (intentionally or negligently)'.

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'.

The entity shows opposition to full value chain coverage and considers that due diligence duty entails very extensive obligations.

It states that: ‘The Directive, as proposed by the Commission, entails very extensive obligations on companies such as the obligation to carry out due diligence across the entire value chain and carry out assessments at least once every 12 months’. It also considers that SMEs will be highly impacted and ‘therefore proposes to limit the obligation to carry out due diligence to the first tier of the companies’ supply chain located outside of the EU’. This is also related with concerns regarding definitions, including the implications of the value chain concept: ‘value chain: The proposed definition of value chain is very extensive as it does not only include the original supplier, but also all other companies in the chain, both upstream as well as downstream. Ceemet therefore suggests to replace the notion of “value chain” by “supply chain” throughout the Directive’.

The entity calls for narrowing the due diligence duty scope to tier-1 suppliers located outside the EU.

It states that: ‘The requirement to carry out due diligence for the entire value chain, both upstream and downstream, is unworkable. Companies cannot control their value chain as it is not in their hands to control and take legal responsibility for their customers’ action. While Ceemet appreciates the proposal of the EP to slightly narrow the definition of “value chain” by deleting the notion “use”, we underline that the obligation will still create an immense amount of administrative burden on companies. … The obligation to carry out due diligence should therefore be limited to the tier-1 suppliers located outside of the EU as a targeted scheme is risk-based and therefore more efficient and effective’.

The entity call for narrowing the scope to tier-1 upstream companies outside the EU, and for limiting coverage to Internationally recognized core standards on human rights.

The entity indicates that: ‘Ceemet suggests to include the following elements in the text of the Directive: The Directive should only apply to those parts of the value chain with which companies have a direct contractual relationship, i.e. the tier 1 suppliers of the upstream supply chain. As there are very high social standards and effective systems of control and enforcement in the EU, companies should focus on their tier 1 suppliers outside the EU … in order not to indirectly affect SMEs. The scope as laid down in the annex must be limited to internationally recognized core standards of human rights. The broader the scope (e.g. climate change and environment), the more difficulties for a successful fulfilment of the due diligence obligations'.

It argues that the European Commission should not have a mandatory due diligence process and that it should be limited only to subcontractors and suppliers in the first tier. Finally, unreasonable requirements on companies for remediation across a large range of operations and suppliers could be detrimental cost wise.

It does not pick any of the possible options in relation to the content of HRDD as per question 15, and adds: ‘The European Commission should not come up with a proposal on mandatory due diligence. ... The plan for a law on the supply chain for all companies does not seem workable in practice’. Also, in question 14, it notes: ‘any due diligence shall be limited only to subcontractors and suppliers in the first tier of the supply chain as companies sometimes have over 100,000 direct suppliers (further upstream suppliers could comprise millions of companies). The opposite is unworkable’. Finally, in answer to question 25, the entity indicates: ‘unreasonable requirements on companies for detailed due diligence efforts and responsibility for remediation across a large range of operations and suppliers throughout the value chain would incur costs at a detrimental level’.

The entity considers that covering the whole value chain is neither manageable nor realistic. It also calls for a reduction of obligations.

The entity states that: 'Focusing on all aspects within the whole value chain is neither manageable nor realistic. Supply chains alone can comprise multiple tiers with hundreds or thousands of locations, product lines and entities. Companies should be able to prioritise the most salient risks and have the freedom to take appropriate actions to cease, prevent or mitigate identified adverse impacts in accordance with a risk based approach. Without this ability to prioritise, companies cannot realistically implement due diligence requirements in an efficient way'. It also points out that: 'The list of norms/conventions in the Annex is too far reaching and generates legal uncertainty. Most of the norms in the annex are only applicable to states and not legal private entities like companies. To be workable, this list should be reviewed and shortened, clearly indicating what are the requirements directly applicable to companies'.

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 opposes broad identification of stakeholders.

The entity states that: ‘The definition of stakeholder is too broad and basically entails anyone, whether they truly have legitimate interest or not. Read in conjunction with other articles (e.g. art. 6§4, art. 7§2a and art. 8 §3b) this would imply that companies will need to carry out consultations to gather information on adverse treatment and in the developments of their action plans with possibly anyone. …. Ceemet therefore strongly suggests to redefine this notion and narrow it down to people that have a true legitimate interest in this matter’.

The entity disagrees to some extent that the EU should require directors to establish mechanisms for engaging with stakeholders as part of due diligence duty and argues against additional DD regulation.

The Company's response to question 20a is, "I disagree to some extent". Then it clarifies that: ‘There already exists EU regulation on the information and consultation of workers. Ceemet therefore considers that additional regulation is not needed. We recognise that consultation of relevant stakeholders is important in the life of companies but it should be up to the company itself to define which stakeholders are relevant in a particular case.

The entity calls for removal of Article 25.

The entity states that: 'Elements going beyond due diligence, i.e. on directors’ general duty of care (article 25) … should be deleted as they are unjustified, intruding and do not fit a due diligence proposal'.