Blackrock

The Company supports the introduction of EU-level framework. Although it avoids referring to any legally binding obligations, and emphasises sector-specific flexibility, especially in the financial sector, they response already refers to a proposal for a Directive, so the support for the legal framework is inferred.

The Company states that ‘we support the EU-level framework introducing requirements for companies to identify and, where necessary, prevent, end, or mitigate adverse impacts of their activities on human rights, and on the environment. A sector-based approach to value chain due diligence will be much more effective and meaningful for all stakeholders, including shareholders. Finally, we do believe a distinction needs to be made between the financial sector approach (especially as it relates to asset management) and all other sectors covered by the proposed Directive. Specifically, we believe an approach similar to the OECD’s own approach in this area, establishing, in particular, a clear distinction between the investor due diligence guidelines and the broader value chain guidelines is warranted’. Since the response already refers to a proposal for a Directive, it is inferred that the support includes assuming a Directive level legal framework.

The Company does not oppose to human rights due diligence in general but calls for excluding investment products and limiting obligations for asset managers.

It states that 'We do not believe it would be appropriate for the Proposal to include financial products such as investment funds (which are often structured as companies under various national company law regimes) within the scope of the Directive as to do so would prevent the clear distinction needed between investors due diligence and corporate due diligence'. It also points out that 'the framework should appropriately take into account differences between asset managers investing on behalf of long-term asset owners in companies and the companies themselves, with direct control over their own value chains'.

Although it does not directly ask for including obligations to avoid human rights impacts in directors' duties, it explains that its approach includes this matter

The Company states that 'In our company engagements, we ask questions to understand how boards oversee management’s approach to supply chain due diligence and assessment of impacts. Consistent with our published priorities6, we encourage companies to report on their approach and how they assure themselves their policies and practices result in robust and responsible supply chains. Where we believe a company’s approach should be enhanced to adequately manage risk, we may not support the reelection of directors or other management proposals or vote in support of relevant shareholder proposals'.

The Company supports value chain due diligence in principle, but for asset managers, they reject the expectation of having full oversight over the investee companies’ value chains.

The Company states that 'We support the introduction of an EU-level framework which will facilitate a rigorous approach to value chain due diligence. ... To raise standards across the economy, it is important that the requirements are flexible enough to adapt to the specificities of different sectors to allow for effective management of value chain impacts ... . the framework should appropriately take into account differences between asset managers investing on behalf of long-term asset owners in companies and the companies themselves, with direct control over their own value chains. While asset managers can, and do, engage with companies on their management of human rights, environmental impacts and other issues in their value chains, responsibility for these business practices lies with the boards and the management of companies themselves. The Company points out the OECD Guidance: 'This guidance showcases the differing nature of feasible due diligence actions that can be undertaken by companies regarding their value chains and those that can be undertaken by investors, or asset managers on investors’ behalf, as part of the investment value chain. In this way, the OECD has sought to make its Guidelines (which apply to all industries and sectors) more relevant for institutional investors, recognizing that “the relationship between an investor and investee company is qualitatively different from the relationship between purchaser and supplier companies. In the former, there are no direct operational or contractual ties between the two, but the investor can seek to influence the investee through ownership'.