Fédération Bancaire Française
Making human rights due diligence a legal requirement for companies including systems to identify, assess, mitigate or manage human rights risks and impacts to improve that process over time and to disclose the risks and impacts, the steps taken and the results.
The entity welcomes the Omnibus initiative and supports the delay of implementation of the CSDDD
"The French Banking Federation (FBF) welcomes the growing political awareness on simplification, which is key to safeguarding European competitiveness and ensuring a more innovative and business-friendly environment. (…) the main request is to suspend the implementation of the directive until the following adjustments have been made." "Under the directive, companies could be penalized in the event of negative impacts resulting from violations of international agreements related to human rights and the environment listed in the annex. This list is very broad and vague, creating legal uncertainty for businesses. Therefore, the number of referenced texts should be reduced."
Requiring Human rights due diligence of all companies, regardless of sector and size, while still reflecting their individual circumstances.
The entity calls for a reduction of the scope of application of the CSDDD
"Thresholds should be revised and increased to reflect to reflect the capabilities of companies to implement due diligences, that is targeting only European companies with more than 5,000 employees and more than €1.5 billion in turnover worldwide and non-European companies with a turnover of more than €1.5 billion on the European market. The duty of care should be assessed at the group-level to centralise the identification and management of risks and not to multiply the effort at the level of each subsidiary."
The entity advocates for excluding cooperative banks from the scope
It states that: 'As cooperatives are not in the scope of the draft directive (art.3, a, i), we are very much surprised that the cooperative banks seem to be in the scope (art 3, a, IV: “a regulated financial undertaking, regardless of its legal form, which is a credit institution…”). We believe that cooperative banks shouldn’t be in the scope, as it is the case in the French 2017 law regarding the duty of care'.
Implementing an enforcement mechanism where companies fail to carry out due diligence as described.
The entity calls for a change to penalties and for administrative sanctions to preclude civil liability
"The directive provides excessively heavy sanctions, particularly financial ones. However, in the event of non-compliance with the provisions of the directive, companies’ civil liability could be triggered in parallel. Furthermore, the failure to comply with the directive's provisions does not, in our view, constitute a breach of public order. To avoid harming the competitiveness of businesses, it seems crucial to introduce a proportionality requirement in determining these sanctions."
The entity advocates for sanctions to be implemented at the EU level
The entity states that :'we would like to harmonise sanctions at EU level to avoid divergent treatment from one country to another (different sanctions depending on the Member State dealing with the case).'
Including in the duties of directors and company law obligations to avoid human rights impacts or “harms”.
The entity is against directors' (supervisory board) having to take responsibility, as some obligations are 'conceivable only for managers'. It also seems to reject the notion of obligation to avoid human rights abuses.
The entity states that ' The draft proposal refers to directors without distinguishing between members of the board of directors and executive directors. Worse, the French translation of the proposal only refers to the board members, while some obligations are conceivable only for managers. Yet, as regards French law, the board of directors shall determine company business strategy and shall ensure the implementation thereof. Articles 25 and 26 would thus benefit from review. Director’s duty of care goes much too far, as it implies for the board of directors to “take into account” the “consequences of its decisions for sustainability matters”, where the board of directors should only be asked to “take into consideration sustainability issues of company’s activity”, so as to avoid being in a deadlock. In any case duty of care shall be an obligation of mean in order to be correctly linked to the duty to act in the best interest of the company. Last but not least, so as to avoid jeopardizing the necessary legal certainty, non-compliance with article 25 shall not lead to the nullity of any act of the company whatsoever'.
Require companies to implement a due diligence process covering their value chain to identify, prevent, mitigate and remediate human rights impacts and improve that practice over time.
The entity suggests limiting the upstream value chain to tier-1 business partners. No information was found on the downstream value chain
"Limiting the upstream value chain to tier-1: The definition of business partners in Article 3 of the directive should be amended to limit it to direct business partners. Otherwise, there would be significant consequences for the competitiveness of the companies involved, as their obligations and responsibilities would be too burdensome, disproportionate, and undefined, also affecting reporting on commercial partners, including SMEs."
The entity consideres that cooperative banks should be excluded from the scope of the legislation, and that value chain obligations should be limited to direct suppliers and contractors. It also calls for the exclusion of certain client-facing financial services.
The entity states that: '‘we propose to delete the notion of “indirect” relationships to focus on “direct” relationships, that are generally materialised by a contract. Having a contractual relationship would indeed ease the implementation of the directive’s various requirements (…). We understand that for financial institutions the “value chain” is limited to “the activities of the clients receiving such loan, credit, and other financial services and of other companies belonging to the same group whose activities are linked to the contract in question” (article 3). In addition, this value chain does not cover households and natural persons not acting in a professional or business capacity and SMEs receiving loan, credit, financing, insurance, or reinsurance. Nevertheless, it is important to keep in mind: 1) That banks can be confronted to the specific case of general-purpose loan. In this case we don’t know for which activities the financing will be used and which specific subsidiaries activities would be involved. 2) That the particular situation and regulation of the financial sector should be further reflected as this sector is already heavily regulated, for instance regarding AML or ESG risks. The wide range and large number of business relationships within the financial sector would make it disproportionately burdensome to apply the Directive to the interbank market and securities clearing and settlement which should be excluded from the scope of the directive'.
Require that companies implement contract clauses and Code of Conduct with business partners clarifying obligations to avoid and to address human rights harms.
The entity indicates that contractual provisions and codes of conduct can be a way of control business partner compliance
"Limit the number of controls to be conducted with business partners: request, through contractual provisions, that the company adhere to its own Code of Conduct (modifying Article 10, paragraph 2b), or perform verifications based on this Code of Conduct. Otherwise, there is a risk of interference in the company's activities."
The entity is against the requirement of code of conduct being implemented through business partners, although does not explicitly refer to clauses related to human rights harms.
The entity states that: 'We believe that each company should follow its own code of conduct, otherwise creating new business relationships may be complicated as companies will have to establish a compliance system with respect to hundreds of business partners. Moreover, in the case of financial institutions, how to manage a situation where several parties require the financial institution to comply with code of conducts that clash with banking rules. Each company should make sure that they have a policy and that they follow it. We believe that the directive should only set general principles that companies should implement their own policies and procedures'
Require that companies identify their stakeholders and their interests.
The entity seems to reject the requirement of obligation of stakeholder identification.
It states the why and how of taking into account the opinion of civil society organizations, which we understand are not necessarily stakeholders? How do we identify them? How is article 26.2 feasible, in practical terms?'.
Require directors to establish and apply mechanisms or, where they already exist for employees for example, use existing information and consultation channels for engaging with stakeholders.
The entity is against directors (supervisory board) having to always take responsibility, as some obligations are 'conceivable only for managers'. It also seems to reject the requirement of an obligation to hold stakeholder consultations.
It states that: 'The draft proposal refers to directors without distinguishing between members of the board of directors and executive directors. Worse, the French translation of the proposal only refers to the board members, while some obligations are conceivable only for managers. Yet, as regards French law, the board of directors shall determine company business strategy and shall ensure the implementation thereof'. It also points out that: ' Article 26 questions in a number of areas. For example, how can stakeholders’ views be taken into account in practice, and what about their possible side effects on companies? Why and how taking into account the opinion of civil society organizations, which we understand are not necessarily stakeholders? How do we identify them? How is article 26.2 feasible, in practical terms?'.
| Legislation | Position |
|---|---|
| EU CSDDD | Not Supporting |
| Omnibus | Not Supporting |
| Member | Performance band |
|---|---|
| BPI France | D |
| Deutsche Bank AG | E+ |
| Allianz SE | E+ |
| BNP Paribas | E |
| Intesa Sanpaolo S.p.A. | E |
| Engie | E |