CSR Europe

The entity calls for shifting from a 'patronizing, compliance-heavy model' to an 'incentive-driven' approach.

The entity states that, ‘All together, we support EU’s ambitious sustainability goals. But the current regulatory approach often prioritizes compliance over competitiveness. From a patronizing, compliance-heavy model we are eager to collaborate to shift this model into an incentive driven approach that enables businesses to lead on sustainability by acting responsibly, and creating value. The … Omnibus Simplification Package present an opportunity to align present and future sustainability policies and regulations with business realities. To maximize impact, we call on EU institutions to … Streamline regulations and improve coherence to reduce complexity and free up resources for innovation. Ensure global alignment to prevent competitive disadvantages for European companies’. In relation to transforming regulation it states that ‘Current EU sustainability regulations burden businesses with excessive complexity’. The solution proposed, ‘Shift to an Incentive-Based Model the EU must recognize that sustainability drives competitiveness’. Propositions include fiscal incentives for early adopters of sustainability practices and simplified regulatory frameworks.

The entity is supportive of CSDDD

The CS3D, as well as the Deforestation Regulation, the Forced Labour Regulation, the Batteries Regulation, and others, are crucial tools to enhance the role of business in reaching the goals set by the European Green Deal.

A human rights due diligence law should be coherent with forthcoming EU policies and in line with ILO and OECD due diligence principles with a mix of national and European measures.

The entity indicates that, ‘A corporate environmental and human rights due diligence law should be coherent with other forthcoming EU policies and coupled with equally ambitious supportive incentives and capacity-building measures within one EU Integrated approach. We agree with the EC that a coherent approach should be in line with ILO and OECD due diligence principles. Moreover, from our experience on the ground, we strongly believe that a wider smart policy mix of national and European measures is needed’.

It supports the adoption of an EU DD law, provided it aligns with upcoming policies and is accompanied by supportive incentives and capacity-building measures, all within a smart policy mix that combines national and European actions.

The entity indicates that, ‘on 29 April 2020, the European Commissioner for Justice, Didier Reynders, announced that the Commission commits to introducing rules for mandatory corporate environmental and human rights due diligence. ... CSR Europe’s initial reaction was to welcome the European Commission’s announcement as long as any future supply chain law will be coherent with other forthcoming EU policies AND coupled with equally ambitious supportive incentives and capacity building measures within one EU Integrated approach’. It adds: ‘we strongly believe that a wider smart policy mix of national and European measures is needed ... it is important to create a level playing field AND foster impact-oriented actions’.

The entity indicates the potential burden of CSDDD on SMEs. It is unclear if CSR Europe wants the scope of the CSDDD to be reduced.

There is a challenging paradox between the needto engage SMEs in the value chain to deliver arobust due diligence exercise and to understandrisks and actual incidence of social harms andenvironmental damage in the value chain. Theburden that a regulation like CSDDD will placeon smaller businesses in terms of monitoringand data collection could be significant. ... Consider adopting the scope proposed for the CSRD (value chain cap), which would limit information requests from companies with fewer than 1,000 employees across both Directives. Consistent thresholds across both regulations would remove uncertainty.

It argues the law should include a requirement for business to remedy harms it causes or contributes towards.

The entity indicates that: ‘Effective remediation measures (e.g. robust monitoring systems, effective and collective investments and collaborative actions) are needed. An HRDD legislation should address the responsibility of businesses to provide remedy where a business causes or contributes to human rights harm, while bearing in mind the role of the State in setting the foundations for effective remedy’.

The entity calls for not removing EU-wide civil liability.

It makes the following recommendation: 'Ensure consistent application across the EU (e.g. the removal of EU-wide civil liability could distort competition within the internal market)'.

The entity is supportive of EU wide civil liability

Reintroduce the EU-wide civil liability regimeas its removal could distort competition inthe internal market by exposing companiesto divergent civil liability regimes acrossMember States. It would also increasethe risk of legal claims for harms beyondcompanies’ control. At a minimum, the scopeof civil liability (original art. 29(1)) shouldbe preserved, including the obligationon member states to limit civil liability toharms caused by a company's own failureto comply with specific obligations toimplement measures to prevent or mitigatepotential adverse impacts (art. 10) and to endor minimise actual adverse impacts (art. 11).

The entity calls for adopting a step-by-step, risk-based approach, starting with tier 1 and gradually expanding.

The statement makes the following recommendations: ‘Provide a clear definition of Tier 1 reflecting sector-specific business models; Adopt a step-by-step, risk-based approach—starting with Tier 1 and gradually expanding— to offer more practical and enforceable solutions … Clarify the scope and exceptions that apply to different business models’. It does not refer to remedy, downstream chain nor improvement over time.

It is unclear if the entity supports full value chain coverage

Focus due diligence requirements under CSDDDto Tier 1 suppliers. 1.5.2 Adopt a risk-based approach starting with Tier 1. If a specific trigger requires a company to extend due diligence beyond Tier 1 suppliers, this assessment should be confined to the specific risk and partner identified only.""Develop explicit guidance on companies’ due diligence obligations at every level of the value chain. This should also be designed to support verification by third parties and more clearly address where non-compliance with the Directive exposes companies to potential punitive action, including penalties or liability."" Provide clarity on the explicit obligations of companies to reactively monitor activities in their supply chain, beyond their Tier 1 suppliers. For example, how far companies must go in investigating credible reports related to potential human rights issues among Tier 2 and Tier 3 suppliers. Replacing reference to vague concepts like ‘plausible information’ with the definitions used in the EU’s Forced Labour Regulation (FLR) (e.g. ‘substantiated concern’) would help clarify these obligations