European Federation of Pharmaceuticals Industries and Associations

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 signatory organizations express clear support for the mandatory nature of due diligence, highlighting its importance for tangible outcomes in human rights, environmental protection, and climate action, as well as its role in establishing mandatory standards beyond sustainability disclosure.

“The CSDDD holds huge promise for leveling the playing field... as well as driving better outcomes for people and planet through global value chains.” “We support the CSDDD and the process to adopt an ambitious final law.” “The Directive should complement mandatory sustainability disclosure with substantive due diligence duties on human rights and environmental impacts…”

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 text asserts that the requirements should apply to all companies and sectors, including the financial sector.

“The due diligence requirements should be risk-based and apply to the entire spectrum of risks and impacts across the full value chains of companies in all sectors, including financial institutions…”

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 organizations demand that the directive include administrative oversight and civil liability, demonstrating explicit support for effective enforcement mechanisms.

“The Directive will not be effective without meaningful enforcement… This includes both administrative supervision and civil liability…”

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'.

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 text clearly states that due diligence should apply to the entire value chain, including both upstream and downstream operations.

"The due diligence requirements should be risk-based and apply to the entire spectrum of risks and impacts across the full value chains of companies in all sectors, including financial institutions, in line with the international standards. The same concepts in those standards that make due diligence feasible in an upstream context – including prioritisation on the basis of severity and the need to look at how a company’s own activities can heighten or reduce risks across value chains – also make it feasible in a downstream context"

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 statement warns against excessive reliance on contractual clauses, favoring collaboration-based approaches instead

“...rather than top-down policing through an overreliance on contracts and audits. Such an approach simply shifts responsibility...”

The letter links stakeholder engagement to risk assessment and the effectiveness of the company’s efforts.

"The distinguishing feature of sustainability due diligence is that it depends for its effectiveness and credibility on the perspectives of affected stakeholders. ... Meaningful and safe engagement with affected stakeholders –with special attention to people in vulnerable situations – is central to due diligence."