French Asset Management Association

The entity agrees that an EU legal framework is needed and the proposed definition of due diligence duty, as well as the necessity of a horizontal approach.

The entity agrees that an EU legal framework is needed for supply chain due diligence (question 2). It states that 'we are already subjected to that through French Law on Duty of Care. For us, it will be about levelling the playing field and we could have similar regulation at EU level'. It also agrees with the proposed definition of due diligence duty (Question 14): 'we agree with the proposed definition of due diligence duty ...'. Finally, it also considers that and horizontal approach should be implemented (question 15): 'a horizontal apporach is a warranty of integrating all ESG aspect and ensure a just transition which is an equally important aspect of a sustainable development'.

Although the entity is in favour of a horizontal approach, it wishes to exclude micro and small enterprises.

The entity is in favour of a horizontal approach (question 15): (question 15): 'a horizontal approach is a warranty of integrating all ESG aspect and ensure a just transition which is an equally important aspect of a sustainable development'. On the other hand, it considers that micro and small enterprises (less than 50 people employed) should be excluded. It wouldn't exclude all SMEs though: 'SMEs in general should not be excluded from this legal due diligence as they represent a vast majority of the economy and have to be taken into account and share their insights, however due to the burden it can become, they should be subject to exceptions in order to integrate their lack of means'.

The Company advocates for supervision by competent national authorities with a coordination mechanism to ensure consistency, and adopting judicial enforcement in a 'reasonable time horizon'.

In response to question 19, the Company is in favour of 'Supervision by competent national authorities (option 2) with a mechanism of EU cooperation/coordination to ensure consistency throughout the EU'. It further elaborates: 'In order to be effective, the companies need to be ensured of the level playing field knowing that the companies that will not respect their due diligence duty will face legal issues and fines. However judicial enforcement should be set in a reasonable time horizon in order to make sur the rules are harmonized within the EU and to lease sufficient time to companies so that they are able to conform to new regulations without severe financial problems'.

Although the entity considers that there's a need of adequate procedures to identify, prevent and address possible risks and adverse impacts on stakeholders, and agrees 'to some extent' that companies should manage the risks in relation to stakeholders, it is against of placing responsibility on corporate directors, and advocates for management personnel to be responsible.

In response to question 7, on whether corporate directors should be required by law to set up procedures to ensure possible risks and adverse impacts are identified, prevented and addressed, the entity disagrees 'to some extent' and argues: 'Directors can ensure that there are in place adequate procedures to identify, prevent and address possible risks and adverse impacts on stakeholders. However, the responsibility of setting up these procedures remain a prerogative of the company’s management, acting under the Board’s oversight.' In response to question 6 on management of risks in relation to stakeholders, the Company agrees to some extent, indicating that 'at company level, the identification and management of stakeholders' risk must be carried out by the management. The supervisory bodies are not well placed to identify and manage the stakeholders'.

The Company does not take position in relation to grievance mechanisms for all stakeholders. It also believes that the EU should not need rules mandating mechanisms for engagement with stakeholders on due diligence duty

The Company did not respond to question related to the inclusion of complaint mechanism as part of due diligence (question 20c). In relation to requiring directors to establish mechanisms for engagement with stakeholders on due diligence duty it disagrees 'to some extent' and says the following: 'Most companies do already have in place mechanisms to facilitate dialogue with their stakeholders (e.g. by having stakeholders represented in an advisory body). Some asset managers also conduct public stakeholder surveys ... and consider stakeholder engagement within ESG materiality maps. ... We believe that directors are obliged to take the company's relevant stakeholders' interest into account when taking decisions, but EU should not require rules on this channel, and should be decided at company level'.

Although they would not wish it to be brought about now, the entity considers that judicial enforcement should eventually start at a reasonable time horizon.

In response to question 19a on the relation to enforcement mechanisms, the entity picks supervision by competent national authorities with a mechanism for EU coordination. However, it states the following: 'In order to be effective, the companies need to be ensured of the level playing field knowing that the companies that will not respect their due diligence duty will face legal issues and fines. However judicial enforcement should be set in a reasonable time horizon in order to make sur the rules are harmonized within the EU and to lease sufficient time to companies so that they are able to conform to new regulations without severe financial problems'.

The entity is in favour of a due diligence duty based on a minimum process and definitions approach applicable across all sectors. It also agrees with the due diligence duty definition proposed by the consultation. However, it expresses concern about the implications of making such a definition legally binding under EU law, and calls for a balance between responsibility and legal liability. Finally, it does not refer to remedy nor full value chain.

The entity is in favour of a due diligence duty based on a minimum process and definitions approach applicable across all sectors (question 15). It agrees with due diligence definition: 'We agree with the proposed definition of the due diligence duty, since it seems consistent with the established understanding in accordance with international principles, in particular the OECD guidelines for multinational enterprises and the due diligence guidance related thereto. The decisive difference is, however, that the OECD Guidelines are non-binding for enterprises, whereas the proposed definition shall form the basis for future EU legal requirements upon companies. A proper balance should thus be sought from the outset between the promotion of responsible business conduct across the supply chain and the actual legal responsibility of companies'. It is not clear, however, whether they consider it should cover the value chain and remedy impacts, as it does not provide further details in relation to these.

The entity is in favour of requiring companies to identify their stakeholders and their interests; however, it is not clear whether it includes all relevant vulnerable groups and communities.

In response to question 6 on stakeholder identification, the entity states that: 'At company level, the identification and management of stakeholders’ risks must be carried out by the management. The supervisory bodies are not well placed to identify and manage the stakeholders. The reason for this is that the management is in charge of the operation of the company whereas the supervisory bodies (“conseil d’administration” or “conseil de surveillance”) are primarily responsible for defining the company’s strategy and/or controlling the management. The management is consequently more likely to identify and manage these issues'. However, in question 5 the entity is asked to determine the relevancy of different stakeholder groups, and it does not take position on whether employees and communities affected by the Company's supply chain are relevant.

The entity is against a requirement for directors and seems to be against the EU ruling on stakeholder engagement requirement (there should be obligation, but the EU should not intercede).

In regards to requiring directors to establish mechanisms for engagement with stakeholders on due diligence duty, the entity disagrees 'to some extent' and explains with the following: 'Most companies do already have in place mechanisms to facilitate dialogue with their stakeholders (e.g. by having stakeholders represented in an advisory body). Some asset managers also conduct public stakeholder surveys ... and consider stakeholder engagement within ESG materiality maps. ... We believe that directors are obliged to take the company's relevant stakeholders' interest into account when taking decisions, but EU should not require rules on this channel, and should be decided at company level'. Moreover, they believe that such mechanisms should apply to management level decisions and not board's.

Although the entity agrees that risk and impacts in relation to stakeholders should be managed, it believes that responsibility for this should lie at the managerial level.

The entity agrees 'to some extent' to question 6, on corporate directors being required to manage the risks for the Company in relation to stakeholders and their interests. It states that: 'At company level, the identification and management of stakeholders’ risks must be carried out by the management. The supervisory bodies are not well placed to identify and manage the stakeholders. The reason for this is that the management is in charge of the operation of the company whereas the supervisory bodies (“conseil d’administration” or “conseil de surveillance”) are primarily responsible for defining the company’s strategy and/or controlling the management. The management is consequently more likely to identify and manage these issues'.