Fuels Europe

"""FuelsEurope considers the proposal as a first step toward ensuring regulatory clarity and operational certainty for the EU industry.""""FuelsEurope supports their objective to increasing corporate transparency and sustainability while noting with concern that they impose significant and often disproportionate obligations on companies.""""The Omnibus provides a key opportunity to streamline reporting requirements, clarify the legal language of some provisions, and rectify unintended negative impacts. These essential adjustments would enable companies to meet the goal of greater corporate responsibility while maintaining their ability to transition to a net-zero model and stay competitive on a global scale."""

"Representing the full energy value chain — from upstream production to downstream consumption, across both conventional and low-carbon fuels — we fully support the EU’s corporate sustainability goals. However, current legislation must become clearer, more proportional, and coherent. While we welcome the Commission’s simplification efforts, further improvements are still needed. We urge policymakers to uphold the proposed simplifications and firmly reject any attempts to reintroduce unnecessary complexity."

"FuelsEurope welcomes the European Commission’s aspiration to make simplification a key political priority and the announcement of an Omnibus initiative to reduce the excessive administrative burden and legal uncertainty coming from the CSRD, CSDDD ..."" ""The Draghi report rightfully pointed out of the dangers of over-regulation and its impact on competitiveness and prosperity. Likewise, both representatives from industry and Member States alike have recently stressed the need to substantially simplify reporting obligations, and urged for bold action. The existing reporting framework imposes disproportionate requirements on EU companies that not only puts them in disadvantage compared to international competitors ... Consequently, FuelsEurope calls on the European Commission to present an ambitious simplification Omnibus proposal, and stands ready to collaborate with the EU institutions in order to ensure a smarter reporting framework that supports companies throughout their transition pathway."

"The proposed Simplification Omnibus Package represents a crucial opportunity to restore regulatory clarity and enable meaningful action on the ground." "As representatives of sectors essential to the energy transition, industrial innovation, and Europe's economic resilience, we call on policymakers to safeguard and reinforce the simplification measuresproposed-and to resist any efforts to reintroduce complexity." "Currently, the interplay between the CSRD, CSDDD, and the EU Taxonomy creates a fragmented and burdensome landscape. Overlapping, overly prescriptive and detailed disclosure and due diligence requirements risk shifting high skilled resources away from real-world impact and toward navigating compliance complexities. The proposed Simplification Omnibus Package represents a timely and necessary opportunity to restore clarity and enable meaningful implementation."

"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. ... 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"

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'.

"...we recognise the potential of due diligence in order to help support respecting human rights and preserve the environment. We acknowledge the Corporate Sustainability Due Diligence Directive (CSDDD) Proposal’s ambition to create a harmonised legislative framework for due diligence on human rights and environment. FuelsEurope appreciates the careful approach taken by the European Commission with this innovative proposal."

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."

"""The possibility to comply at a consolidated level would guarantee multiple benefits. First of all, mother companies could offer a more comprehensive view of the risks of the group operations. Moreover, it would reduce the administrative burdens for companies avoiding that the same group would have to deal with different National Authorities for the monitoring of the due diligence plans. This would also avoid that in the same group different monitoring standards would be used and would help to achieve the harmonisation objective of the proposal.We suggest to clearly establish the possibility for groups of companies to comply with the due diligence requirements at a consolidated level."""

"We consider several of the proposed changes for the CSDDD as steps in the right direction, such as: More flexibility in the calculation of the penalties, with the removal of the imposition of a minimum percentage based on the net worldwide turnover of the company."

"We welcome the removal of the harmonised EU civil liability regime under Article 29 of the CSDDD. However, residual elements, such as joint liability, broad evidentiary obligations, and unclear thresholds for disclosure, still undermine legal certainty and contradict the Commission’s own simplification objectives." "We believe that, to maintain coherence and subsidiarity, civil liability should be governed by national systems."

"""FuelsEurope supports the EC willingness to create a coherent and harmonised liability legal framework in order to ensure the enforcement of the proposal."" "" FuelsEurope acknowledges the system of penalties and sanctions, naturally embedded in a law, foreseen in the CSDDD proposal. We recommend for such penalties and sanctions to be reasonable and proportionate. In particular, regarding the administrative pecuniary sanctions set forth in article 20 we appreciate that the EC would limit the possibility to impose a sanction only after it would be given the possibility to the undertaking the possibility to comply (article 18), however it should be avoided that in case of adverse impacts undertakings actively adopting remedial actions would be sanctioned. Moreover, leaving to Member States the possibility to establish the administrative sanctions based on companies’ turnover would not ensure the right harmonisation amongst the Member States. It would be therefore appropriate to establish other dissuasive sanctions before to impose a pecuniary sanction as well as it should be set forth at EU-level a minimum and maximum cap for the pecuniary sanctions. Finally, penalties and sanctions should be in alignment with other regimes.We suggest to:- exclude the possibility to impose pecuniary sanctions where active remedial actions would be or are being taken by the company to avoid or mitigate adverse impacts;- introduce at EU-level alternative dissuasive sanctions before to impose pecuniary ones;- establish at EU-level a maximum cap for pecuniary sanctions.- clarify the conditions and limits in which a company has to certify that no sanctions have been imposed on them for not complying with the obligations of the Directive (art. 24)."

"Regulating directors’ duties as suggested by the Commission does not belong in a due diligence framework. It will have negative side-effects, including the disruption of existing, well established governance models of member states and non-EU countries, without added value to the ability of companies to apply effective due diligence. Proposal: We ask for the ‘director of duties’ element not be considered within the scope of the CSDDD, and to be left as a national regulatory issue.

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'.

"""Article 25 may be interpreted as establishing for directors of companies a general duty of care regarding the sustainability matters covered by the proposal as well as the liability in case of breaches according to Member States laws, regulations and administrative provisions. FuelsEurope understands the spirit of the article aiming at ensuring that the sustainability matters would contribute to the decision on the short and long-term company strategies. However, most of the Member States already foresee corporate liability for the commission of crimes and these legislations usually already include liabilities for crimes against the workers and the environment. Moreover, when a company has a board of directors often national legislations establish their criminal liability in case of active or omission behaviour that materialise an illegal act.Therefore, it seems that the additional duty of care set forth by article 25 (if to be interpreted as such) could be against the principle of ne bis in idem.We suggest to delete the above-mentioned provision or to add explicit language to avoid that:- Member States transposition would create new liabilities or enforcement regime against directors;- The same violation would be punished twice.""""Limitation of the definition of “director” set forth in article 3 (o)."""

"We consider several of the proposed changes for the CSDDD as steps in the right direction, such as: ... The reliance on national law for civil liability matters"

"Civil Liability – Fully remove residual liability provisions from the CSDDD and respect subsidiarity. Legal responsibility must remain within national systems to avoid litigation risk and regulatory overreach."

"We welcome the removal of the harmonised EU civil liability regime under Article 29 of the CSDDD. However, residual elements, such as joint liability, broad evidentiary obligations, and unclear thresholds for disclosure, still undermine legal certainty and contradict the Commission’s own simplification objectives." "We believe that, to maintain coherence and subsidiarity, civil liability should be governed by national systems."

"""We call for balanced legal liability provisions, including sanctions which 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 held liable for damages they have not – intentionally or negligently – caused""""Proposal: While we continue to believe that the civil liability provisions should defer to existing tort law instead of creating new duties, the Council’s position on Art. 22 (that civil liability is limited to failures to comply with the obligations laid down in Articles 7 and 8) represents the most rational approach currently under consideration. However, some concerns remain. In particular, we would like to emphasize that the mandatory application of EU law in Art. 22(5) ignores foreign laws that may be applicable if the damage occurred in another (i.e., non-EU) country."""

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'.

"""FuelsEurope supports the EC willingness to create a coherent and harmonised liability legal framework in order to ensure the enforcement of the proposal."" "" FuelsEurope acknowledges the system of penalties and sanctions, naturally embedded in a law, foreseen in the CSDDD proposal. We recommend for such penalties and sanctions to be reasonable and proportionate. In particular, regarding the administrative pecuniary sanctions set forth in article 20 we appreciate that the EC would limit the possibility to impose a sanction only after it would be given the possibility to the undertaking the possibility to comply (article 18), however it should be avoided that in case of adverse impacts undertakings actively adopting remedial actions would be sanctioned. Moreover, leaving to Member States the possibility to establish the administrative sanctions based on companies’ turnover would not ensure the right harmonisation amongst the Member States. It would be therefore appropriate to establish other dissuasive sanctions before to impose a pecuniary sanction as well as it should be set forth at EU-level a minimum and maximum cap for the pecuniary sanctions. Finally, penalties and sanctions should be in alignment with other regimes.We suggest to:- exclude the possibility to impose pecuniary sanctions where active remedial actions would be or are being taken by the company to avoid or mitigate adverse impacts;- introduce at EU-level alternative dissuasive sanctions before to impose pecuniary ones;- establish at EU-level a maximum cap for pecuniary sanctions.- clarify the conditions and limits in which a company has to certify that no sanctions have been imposed on them for not complying with the obligations of the Directive (art. 24)."""

"We consider several of the proposed changes for the CSDDD as steps in the right direction, such as: The limitation of due diligence obligations in the value chain to direct partners (“Tier 1’), without excluding however the extension to indirect business partners in certain cases"

"companies could be held accountable for harms caused exclusively by independent partners several tiers down the value chain, even when they have taken all due measures under the Directive. This disincentivises engagement, creates litigation exposure, and duplicates existing national liability frameworks." "Obtaining granular ESG data from these suppliers, especially SMEs or those in jurisdictions with different legal systems, is often not just difficult, but impossible. Companies report that suppliers are increasingly unwilling to disclose information due to commercial sensitivity or regulatory conflict. We welcome the introduction of a value chain cap and recommend further clarification on what constitutes “commonly shared information” and how proportionality principles will apply — particularly for non-EU data collection. Without this, the reporting burden may result in unintended supplier disengagement and "concentration risks"

"We call for a narrow definition and application of ‘value chain’. Proposal: We call for a definition of ‘value chain’ including only direct contractual suppliers (upstream), and not downstream. In our view, given the complex business model of the Oil&Gas industry, the logical and workable solution is to include first-tier suppliers only. Otherwise, the inclusion of the thousands of second-tier suppliers would make the value-chain coverage unworkable, consequently undermining the whole framework. Moreover, we insist that the concept of “established business relationships” as designed by theCommission proposal - particularly when applied to indirect business partners - is unclear. As a matter of fact, a legally mandated course of downstream due diligence requiring companies to conduct due diligence on the entirety of their downstream value chain - beyond where otherwise required by law or individual company commitments - would be overly complex and expensive, if not impossible. Such requirements would create problems across industries, but they would be especially acute in the oil and-gas and fuel manufacturing sectors in light of the numerous uses of petroleum products, as well as renewable fuels and products, due to the difficulty in tracking their use by customers, and the fungible nature of these products which could mean they have been traded/sold dozens of times prior to reaching the end consumer.Proposal: We ask for a better definition of the concept of ‘established business relationship’ in a way that it could limit the material scope of the obligations imposed by the Directive to a level commensurate with the level of control that a company may have on its supply chain.""""Furthermore, the presence of a subsidiary engaging in business in the EU should not systematically be a reason for the parent company to be held responsible for its actions. ... Identification and definition of responsibilities that parent companies may have on their subsidiaries’ actions should be assessed on a case-by-case basis."""

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 definition established business relationship should be limited to the direct business relationship"" ""The definition of “value chain” is very broad covering both the upstream and the downstream established business relationships. The reference to “and related activities” also makes this definition unclear and open-ended. It should be recognized that in the context of long and complex value chains it is practically difficult to influence and control the behaviour of the outer edge part of the supply chain and even more of the value chain.""""a too broad definition of value chain would increase the burdens on the companies and may hamper the well-functioning of the trade flows because it would be too risky for companies to develop business relationships with remotely located undertakings. And, with regard to downstream, in practice, due diligence is generally not reasonably implementable on customers. We therefore suggest to limit company’s obligations to the upstream first tier level.""""""FuelsEurope acknowledges the objective of the EC to mitigate the administrative burdens for the SMEs and to support them. However, articles 7(4), 8(2)(e) and 8(5) seem to set forth an additional and broad obligation for large undertakings meeting the thresholds of article 2 to support SMEs to establish prevention plans, comply with the code of conduct and include contractual assurance in their business relationships. In many cases this could amount to support for compliance with laws relating, for example, to working conditions or protection of the environment already applicable to the SME. FuelsEurope would like to emphasise that it would be unfeasible for large undertakings that usually work with a huge number of SMEs to adequately support them. Thus, the necessary support and flexibility should be provided to the SMEs by the Member States in order to comply with the obligations set forth in the above-mentioned articles.""

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'.

"FuelsEurope acknowledges the objective of the EC to mitigate the administrative burdens for the SMEs and to support them. However, articles 7(4), 8(2)(e) and 8(5) seem to set forth an additional and broad obligation for large undertakings meeting the thresholds of article 2 to support SMEs to establish prevention plans, comply with the code of conduct and include contractual assurance in their business relationships. In many cases this could amount to support for compliance with laws relating, for example, to working conditions or protection of the environment already applicable to the SME. FuelsEurope would like to emphasise that it would be unfeasible for large undertakings that usually work with a huge number of SMEs to adequately support them. Thus, the necessary support and flexibility should be provided to the SMEs by the Member States in order to comply with the obligations set forth in the above-mentioned articles."