DIGITALEUROPE

The entity generally supports the Omnibus package concerning implications for the due diligence directive.

It states that: 'We’re pleased to see the Commission’s Omnibus package take steps to simplify sustainability reporting and due diligence. Businesses across Europe are fully committed to ambitious sustainability goals, but they need a regulatory environment that reduces unnecessary paperwork whilst ensuring that requirements remain clear, feasible and proportionate'.

The entity welcomes the omnibus package, including the delays of transposition and phased implementation of requirements.

The document states that: 'we are pleased that the European's Commission's proposed omnibus package proposes ambitious steps to simplify … due diligence obligations'. It also indicates that: 'we strongly welcome the proposed postponement of the transposition deadline and the phased implementation of requirements'.

The entity expresses support for a binding EU framework, provided it is harmonised, risk-based and aligned with international standards.

The entity states that: 'DIGITALEUROPE supports a common approach at European level that supports the political and strategic objectives of the Union'. It adds that: 'A European DD legal framework should ensure a harmonised and global level playing field with particular attention given to support SMEs. The obligation to conduct DD should be risk-based according to the UN Guiding Principles on Business & Human Rights (UNGPs)'. Finally, regarding disclosure: 'Regarding disclosure and the obligation to communicate, companies should be given flexibility to report (separate report, CSR, financial, management, modern slavery, Global Compact, etc.) according to their specifics as well as on timing'.

The entity is in favour of a legal framework for human rights due diligence, generally agrees with due diligence duty definition, and advocates for a horizontal approach.

It agrees with the need of a legal framework (question 2). Advocates for a horizonal, minimum process and definition approach (question 15) and generally agrees with due diligence duty definition (question 14) . It points out that: 'We generally agree with the provided definition and support Union’s efforts to promote human rights and the safety of workers in global supply chains'.

The entity supports a legal framework on mandatory human rights due diligence however, it considers that the current proposal, 'should be modified to deliver an effective and implementable outcome'.

The entity states that it is, ‘supportive of a common approach and level playing field at EU level on mandatory human rights and environmental due diligence. … The aim should be to introduce an effective legal framework which is practical for companies to comply with and for national authorities to enforce. … However, to realise this ambition, the current proposal should be modified to deliver an effective and implementable outcome’. It also points out that ‘as currently drafted the draft Directive will not lead to a level playing field and risks the uniform functioning of the Single Market in this critical area. By allowing Member States (MS) discretion on the implementation (MS can explicitly maintain or adopt legislation which could go further than the Draft Directive)’.

While signatories show general support for CS3D objectives, they urge rapid adoption of the postponement measures in the Omnibus package. Their position centres on delaying implementation.

The statement points out that: 'Although we stand behind the objectives of the CSRD and the CS3D, any setback in the adoption of the proposed postponement measure would jeopardise the stability and predictability that companies require to plan their long-term investments and compliance strategies'. It also indicates that 'reporting obligations under these laws are considerably resource intensive, often requiring additional headcount and a substantial financial investment. By swiftly postponing requirements set in the CSRD and the CS3D, policymakers can avoid squandering vital business resources'.

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 is in favour of a regulatory approach towards due diligence.

"""As industry associations / responsible business initiatives, we stand behind the EU’s objective to ensure respect for human rights and the environment through an EU-harmonised regulatory approach to due diligence""""We call for: Full harmonisation and consistency of EU due diligence requirements in sectoral and cross-sectoral policies and legal frameworks, in terms of scope, standards and enforcement modalities to ensure respect of better regulation principles."""

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 expresses support for scope covering all companies regardless size.

The entity states that, ‘obligations should be agnostic of … the size of the company to ensure a global level playing field. Specific support should be provided to SMEs for them to avoid unnecessary burdens’. The recommendation is that ‘To better achieve the goals of the proposal, a risk-based approach should be adopted and applied to all companies regardless of size’.

The Entity would not exclude companies, although it would apply lighter reporting requirements to SMEs, and is in favour of a horizontal, 'minimum process and definitions approach'.

In its response to question 16 the Entity states that: 'SMEs should have lighter reporting requirements and different means of support'. Hence, it wouldn't exclude companies (there are options to exclude companies by size in this question). In response to question 15, it advocates for a minimum process and definitions approach, which by definition should be applicable to all sectors.

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."

The entity opposes strong liability-based enforcement; prefers softer administrative measures and safe harbours.

The entity refers to Australian MS Act, indicating that it, ‘incorporates a business-to-business obligation for company compliance and is preferred to liability, sanctions, and fines. If the EU considers such penalties, then a safe harbour for liability should be built into the system. Sanctions for noncompliance should primarily be civil/administrative’.

The entity advocates for supervision by national authorities with a mechanism of EU cooperation/coordination. It also argues that efforts should be made to improve and that previous years should be taken into account.

In its response to question 19 the entity advocates for supervision by national authorities with a mechanism of EU cooperation. It then states that: 'Companies should be liable for failing to maintain a reasonable due diligence process, or for providing inaccurate or deceptive statements about their process. This should be supported by appropriate sanctions commensurate with these obligations. As a result, we align with AIM on the definitions of liabilities that consider the quality of due diligence measures taken, company knowledge or expected anticipation of the impact itself, and extent to which a company may have contributed'. It then describes different scenarios.

Entity supports the proposal in general terms.

"We call for: ""Full harmonisation and consistency of EU due diligence requirements in sectoral and crosssectoral policies and legal frameworks, in terms of scope, standards and enforcement modalities to ensure respect of better regulation principles.""""The European Commission to facilitate engagement between enforcement agencies at Member State level by (for example) establishing an EU-level expert group, to ensure coherent national enforcement."""

The entity disagrees, 'to some extent', that directors should be required to, 'manage risks for the company in relation to stakeholders and their interests', and to establish procedures to ensure that risks and impacts are identified, prevented and addressed.

The entity, 'disagrees to some extent', to questions 6(2) and 7. In relation to question 7, on whether directors should be required to establish procedures (and targets) to ensure risks and impacts are identified, prevented, and addressed, it states: 'If companies implement a robust due diligence to the full, there is no need for additional director duties'.

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 supports remedy obligations aligned with UNGPs, with protection measures.

The entity states that: 'An approach to remediation in line with the UNGPs & grievance mechanisms is preferred (UNGP31), including protection from retaliation and with best efforts recognised. Such an approach has been used in existing DD systems'.

The entity is in favour of a requirement to provide remedy in case of harm.

In response to question 19, it states that, '• If a company has caused or may cause an impact, it should be expected to prevent or mitigate the impact and remediate any harm if impact occurred. • If a company has contributed or may contribute to an impact, it should be expected to prevent or mitigate its own contribution or use its leverage with other parties to prevent or mitigate it (contribute to remediating harm if impact has occurred, to the extent of its involvement)'.

The entity is in favour of a requirement to exert leverage and/or provide support to business partners in remediation.

The entity states that: 'If a company has not caused or contributed to an impact, but may have operations, products or services linked to an impact through a business relationship, it should be expected to use its leverage with others, including suppliers, to prevent or mitigate the impact (but with no responsibility to provide remedy but with the option to do so as chosen)'.

The entity supports provision of grievance mechanisms consistent with UNGP 31.

The entity advocates for an approach, 'to remediation in line with the UNGPs & grievance mechanisms is preferred (UNGP31), including protection from retaliation and with best efforts recognised. Such an approach has been used in existing DD systems'.

The entity considers that grievance mechanisms as part of due diligence duty should be promoted at the EU level, and considers as relevant employees and communities, both at the level of one's own operations and the broader supply chain.

The entity considers that Complaint mechanisms should be promoted at EU level as part of due diligence (question 20c). It considers all stakeholder groups presented in question 5 as relevant. It states that: 'It is important that businesses have flexibility in this area so that they are able to make the best decisions for their own individual circumstances whereas additional regulatory burden might inhibit this flexibility The complaint mechanism mentioned is to alert companies about the situation but without liability and not subject to judicial oversight.

The entity supports the use of grievance mechanisms, although calls for company discretion to evaluate complaints and meet with complainants. It does not clarify if it supports availability for all stakeholders.

The entity states that: 'A company should be given discretion to evaluate complaints and meet with complainants as reasonably appropriate. Forcing companies to meet with all complainants regardless of a complaint's merit, risk or severity of issue may will motivate complainants to weaponize this requirement'. It however, does not clarify whether it is in favour of allowing availability to all stakeholders.

The entity opposes the current EU-level civil liability regime, criticising it for creating legal uncertainty and uneven enforcement, and supports its removal in favour of a means-based obligations that limit liability exposure.

The statement indicates that: ‘the current civil liability framework under Art. 29 introduces legal uncertainty and risks disproportionate enforcement .... As it stands, Art. 29 does not sufficiently mitigate the risk of diverging liability regimes, leading to an uneven playing field for businesses operating across different jurisdictions. In this context, we support the proposed removal of the EU-level civil liability regime, which aligns the framework towards obligations of means rather than obligations of result. This shift will provide greater legal clarity and will limit the risk that companies are subjected to open-ended liability risks for outcomes beyond their direct control’.

The entity shows opposition to judicial liability provisions.

The entity prefers a business-to-business obligation for compliance over, 'liability, sanctions, and fines. If the EU considers such penalties, then a safe harbour for liability should be built into the system. Sanctions for noncompliance should primarily be civil/administrative. However, criminal sanctions could be considered for intentional, severe and/or repeated violations'.

The entity doesn't consider this a suitable option as an 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 also indicates that 'defining companies' responsibilities to respect human rights is different from legal liability, and then explains situations where companies are expected to show responsibility, but doesn't refer to liability.

The entity calls for decoupling the due diligence duty from liability, limiting liability, 'to the most egregious human rights violations', and limit civil liability to direct business relationships.

The entity indicates that: 'The division of responsibilities between the States responsibility to protect human rights and company’s responsibility to respect human rights must be embedded into any legislative initiative. Any due diligence duty must be based on existing international frameworks', and recommends to 'de-couple the due diligence duty from the liability'. It also points out that 'Imposing ’policing’ requirements upon companies should be avoided, human rights and environmental impacts should be primarily addressed by governments. Company liability should be limited to only the most egregious violations'. It also calls to limit civil liability to direct business relationships: 'Civil liability should be tied to something more than a mere failure to comply with Article 7 and 8. It should be some level of gross negligence or willful misconduct or willful omission that results in liability'.

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 obligationof 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 welcomes the deletion of extraterritorial liability provisions.

It states that: 'we welcome the deletion of extraterritorial liability provisions, which would have exposed companies to lawsuits within the EU and in other jurisdictions, even when they had fully complied with their EU due diligence obligations. Extraterritorial liability rules create significant legal and compliance challenges for multinational businesses with operations outside the EU, adding legal uncertainty and potential conflicts with third-country laws’.

The entity welcomes limiting the obligation to conduct due diligence at the level of indirect business parnters.

The statement indicates that: 'DIGITALEUROPE supports relieving companies from administrative burden and understands the intention behind the proposal to limit the obligation to conduct due diligence at the level of indirect business partners. We underline that a limitation of the obligation to systematically conduct in-depth assessments to direct business partners (tier 1) must not infringe on the principle of a risk-based prioritisation, regardless of the depth of the obligation’.

The entity opposes to whole value chain coverage and supports a limited, risk-based approach.

The entity states that: '‘Concerning the reach of DD obligations to third parties, we prefer a UNGP risk-based approach considering business relationship direct linkage. Value chain complexity (UNGP17) should be recognised, and the OECD DD Guidance for Responsible Business Conduct should be applied. It is common for companies in our industry to have long and complex value chains comprising 10,000+ direct suppliers and customers. It must be recognised that large brands alone cannot control, police, audit the entire value chain especially where multiple tiers exist. In addition, intellectual property concerns create legal barriers to engage suppliers with whom they do not have a direct business relationship’.

The company generally agrees with the due diligence duty definition provided, including remediation of impacts. However, it does not clarify its position in relation to the downstream value chain (nor improvement over time).

In response to question 14, the entity states that: 'We generally agree with the provided definition and support Union’s efforts to promote human rights and the safety of workers in global supply chains'. It also indicates that: 'we would like to point out the importance of a clear definition of “business relationships'. It is in favour of remedying impacts caused or contributed to: 'If a company has caused or may cause an impact, it should be expected to prevent or mitigate the impact and remediate any harm if impact occurred. If a company has contributed or may contribute to an impact, it should be expected to prevent or mitigate its own contribution or use its leverage with other parties to prevent or mitigate it (contribute to remediating harm if impact has occurred, to the extent of its involvement)'. It does not refer to improvement over time.

The entity oposes to full value chain approach and advocates for narrowing definitions and limits. It does not refer to remedy nor improvement.

The entity points out that: '‘The definition of ‘value chain’ is too vague and not frequently applied in the field of human rights and environmental due diligence. Moreover, ‘value chain’ could be interpreted as including the end use of products which is extremely difficult to control and detracts from the identification and mitigation of salient risks in supply chains’. Then it recommends ‘an approach like the German Supply Chain Act should be followed, including the use of ‘supply chain’ over ‘value chain’’. It also calls for adopting a risk-based approach to due diligence rather than, 'administrative checklists / compliance / reporting exercises’. It does not refer to remedy nor improvement over time.

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'.

Although it does not oppose to contractual clauses, considers that it should refer to suppliers, and calls for partial implementation on a 'go-forward basis'.

The entity states that contractual assurances from direct partners, 'should be done on a go-forward basis or on reasonable risk-based basis, from a legal perspective it is extremely difficult to amend contracts after the fact. Companies work with many suppliers, and it is unrealistic to expect companies to amend existing contracts wholesale to put in place contractual assurances especially given the financial burden that may result as these responsibilities and assurances cascade'.

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 welcomes the limitations imposed on stakeholder engagement requirements.

It states that: 'DIGITALEUROPE supports the proposed changes to CS3D that ensure engagement is limited to directly affected stakeholders or their legitimate representatives, preserving the directive’s intent without creating excessive legal exposure'.

Although the entity seems to disagree with question 6, it seems to agree with a requirement to identify stakeholders.

The entity considers all stakeholders presented in question 5 as relevant. In addition, although it disagrees, 'to some extent', with question 6(1) on corporate directors being required by law to identify stakeholders and their interests. It clarifies that: 'While we agree that the executive management of a company should identify stakeholders, manage related risks and identify opportunities (1-3), we consider that regulating actions taken by corporate directors would remove their ability to prioritize and focus on the corporate activities most appropriate for the long-term interests of the company and its stakeholders'.

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.

The entity disagrees to some extent to this requirement,, particularly on directors' duties, although it agrees on company engagement as part of due diligence duty. It states that: 'It is already the case that, for any business to operate effectively, it must consult with a broad range of stakeholders in the definition and execution of business strategy and will have existing mechanisms in place to support this. Indeed, good businesses recognise that the long-term health of their business will depend to a significant extent on their ability to embrace the interests of key stakeholders and they act accordingly ... This should be addressed through due diligence requirements, which need to include stakeholder consultation'.

The Company disagrees to some extent with this requirement, which is explicitly and directly asked in the consultation.

It states that: 'we consider that regulating actions taken by corporate directors would remove their ability to prioritize and focus on the corporate activities most appropriate for the long-term interests of the company and its stakeholders. In addition, legally-binding common obligations imposed at EU level on corporate directors would not be able to take into account the specificities of each country/sectors/company/governance, which could lead to consequences contrary to the goal of any regulation in this area. We believe that ... the scope of any European legislation could only be focused on harmonization of objectives across the Union ... but should not impose general duties on company’s directors without taking into consideration the specificities of each business.'