MVO Nederland

The entity has signed a joint post opposing the weakening of standards and ambition of due diligence obligations under the Omnibus package.

While some companies and politicians are calling for the postponement or weakening of European sustainability rules, ... dozens of large and small companies, among others, are sounding a different note. ... they call on the European Commission and the government to stick to the pace and level of ambition of legislation from the omnibus package: CSRD, CSDDD and the EU taxonomy.*text translated, original language Dutch

The entity agrees with a comprehensive legal framework, considering that voluntary measures alone have failed, and largely agrees with due diligence duties proposed.

The Company agrees (question 2) that an EU legal framework is needed and adds: ‘All companies in Europe should do business with respect for human rights and the environment in its own operations, subsidiaries and global value chain, including supply and subcontracting chains. Voluntary measures alone have failed, as numerous studies have shown. A smart mix of policy measures including mandatory due diligence for all companies should be introduced’. It largely agrees with due diligence duty definition proposed (question 14)

The entity welcomes the Due Diligence Directive and makes some observations in order to tighten its requirements.

The statement indicates that: 'MVO Nederland welcomes the European Commisions’ proposal for a Directive on Corporate Sustainability Due Diligence, and would like to bring the following observations under the Commission’s attention …'. These refer to increasing scope, tightening enforcement, widening the focus of due diligence duties, etc.

The statement expresses support for the Commission’s due diligence rules and urges that the legislation not be reopened or delayed in its implementation.

‘We, the 40 undersigned companies, would like to stress that we are ready to implement the CSRD, CSDDD and Taxonomy effectively. We are writing to you to express our support for the European Union’s sustainability and due diligence rules. … Reopening or postponing these crucial pieces of legislation would negatively affect us for …’. We call upon the Commission to not reopen and renegotiate already agreed and adopted legal texts. While we support efforts to avoid imposing unnecessary complexity on companies, … we urge you to leave the scope, level of ambition and principles of these laws intact. … We strongly request that you follow the established timeline for the transposition and implementation of these crucial laws, and ensure the timely provision of clear guidelines for compliance’.

The signed entities proactively call on MEPs to vote in favour of the CSDDD and support it being passed into legislation.

"Dear MEPs, On April 24, the European Parliament will vote on the Corporate Sustainability Due Diligence Directive (CSDDD), the European law that can ensure companies address issues in chains around human rights and the environment. Companies united in the Sustainable and Responsible Business Initiative (IDVO), support the CSDDD and therefore ask you to vote for this law on April 24. ... Although the CSDDD's final text is less ambitious than we had hoped, passing this law is an essential step in making corporate social responsibility the norm."

The statement calls for preserving the core of the EU sustainable finance framework, including corporate due diligence, considering that regulatory simplification can be achieved without compromising the substance of the new rules.

Signatories, ‘are issuing this joint statement to emphasise the importance of preserving the core of the EU sustainable finance framework. Rules on … corporate due diligence are a key foundation for achieving the EU’s economic and sustainability goals. … In the context of the Omnibus I simplification initiative, we call attention to the investors, banks, other financial institutions and companies across our economy that support preserving the core elements of the … Corporate Sustainability Due Diligence Directive (CSDDD). … CSRD/ESRS and CSDDD are essential for achieving the EU’s wider sustainability, growth and competitiveness ambitions. … The signatories of this statement consider that regulatory simplification can be achieved without compromising on the substance of sustainability rules or their significant benefits for businesses across the EU’.

The entities welcome the directive and urge EU legislators to support it.

The statement includes the following: 'The CSDDD is substantially aligned with the international standards on Responsible Business Conduct... This makes it credible and its implementation manageable. At the same time, it is ground-breaking as it makes due diligence mandatory for companies that are in scope across the EU... We support the CSDDD and call on European decision-makers to do so as well.'

The entity favours of a, "minimum process and definitions approach", complemented with further requirements for environmental issues and argues that the law should apply to all enterprises independently of size or sector.

The entity states (question 16): ‘The EU directive should apply to all businesses, including multinational enterprises, regardless of their size and sector. Limitations in the scope of the EU directive would exclude many companies whose operations have significant actual or potential adverse impacts in the areas covered by due diligence obligations’. In its response to question 16 it states that '‘The law should apply all enterprises, multinational, large companies and SME’s operating in all sectors, including state owned enterprises, procurement services, letterbox companies, and all enterprises commercially active on the European market. The scale and complexity of the means through which enterprises meet the requirements under this law must be in accordance with the actual and potential negative impacts, market position and size of the company. We reject the view that due diligence should be seen as a “burden” for companies. ... SMEs can, just like large companies cause significant harm, regardless of their size’.

The entity calls for including every company within the Directive's scope.

The entity indicates that: ‘MVO Nederland stresses the importance of a level playing field for frontrunning companies who have sticked their necks out by investing in fair Due Diligence practices over the years. … Therefore all companies should be obliged to comply, as we expect all companies should be working according the OECD Guidelines. In practice, proportionality should be taken into account and SMEs should be supported in order to increase their positive impact and influence in the supply chain’.

The entity advocates judicial enforcement and supervision by competent national authorities with a mechanism of EU coordination to ensure consistency.

In response to question 19, the Company is in favour of at least two mechanisms including judicial enforcement with liability in case of harm and supervision by competent national authorities with a mechanism of EU coordination. It further elaborates: ‘There should be four ways of supervision and enforcement: 1. There should be a competent, independent, adequately resourced and staffed national regulator checking compliance with the law. ...; 2. Under the law, victims and other stakeholders should be able to take companies to court for not fulfilling their due diligence obligations to seek compensations for harm done; 3. If a complaint is filed on non-compliance with the due diligence obligation resulting in potential damage for victims, mediation can be requested. ... 4. Exclusion of public procurement or positive incentives ...’.

The entity calls for the appointment of a watchdog and providing it with enforcement measurements.

The statement indicates that: 'Without a stick to push the laggards forwards, these companies lagging behind are not stimulated to improve their practices. We strongly advice the Commission to appoint a supervising body (or ‘watchdog’) and provide this body with enforcement measurements, including criminal law as last resort'.

The entity strongly agrees with requirements for directors to establish procedures to identify, prevent and address possible risks and impacts, and to manage risks in relation to stakeholders and their interests. It calls for stronger standards.

The entity strongly agrees with question 7, on requirements for directors to establish procedures to identify, prevent and address possible risks and impacts, and to manage risks in relation to stakeholders and their interests (question 6). Specifically, It adds: ‘The duty of care that directors owe to the Company already requires them in principle to address the abovementioned points, therefore a formalisation of such vaguely defined aspects of directors' duties will not likely have any effect on the directors. ... A more meaningful approach would be to clarify how the stakeholders' interests should be considered ... as well as from the perspective of the management of risks ...'. In response to question 7, it adds that 'The upcoming initiative should consider how boards can address impacts and risks on a regular basis, supported by relevant committees … as well as the need for relevant expertise within and outside the board … Most importantly, the boards should be responsible for overseeing and ensuring the quality of the materiality determination and due diligence processes. … As part of their duty of care, directors should be required to integrate sustainability and due diligence matters in corporate strategy and business models and make sufficient resources available to management to carry out the due diligence duty of the company'.

The entity advocates for enforcement mechanisms that include liability and compensation, at least in the case of harm caused by not fulfilling due diligence duty.

In its response to question 19a the Company chooses, among other enforcement mechanisms, judicial enforcement with liability in the case of harm caused by not fulfilling the due diligence duty. Although the entity does not refer to remedy in other contexts, it is not directly asked about it either.

The entity advocates for judicial enforcement with liability and compensation in case of harm caused by not fulfilling the due diligence obligation and elaborates on it.

In response to question 19a on enforcement mechanisms to make DDD effective, the entity advocates for judicial enforcement with liability and compensation in case of harm caused, and Supervision by competent national authorities (option 2) with a mechanism of EU cooperation/coordination to ensure consistency throughout the EU. It also adds that: ‘If the enterprise remains in non-compliance are the regulator may impose sanctions and fines escalating up to a maximum fine and penalties directed at of the responsible directors and board members for failure to comply with the law (the latter would imply repeated breach of due diligence obligations would be included under criminal law). ... Under the law, victims and other stakeholders should be able to take companies to court for not fulfilling their due diligence obligations to seek compensations for harm done’.

The entity largely agrees with due diligence duty definition and aims to stress the importance of continuous improvement, and make sure that the process includes consumers' interest.

It generally agrees with due diligence duty definition (question 14) and states, ‘the new law needs to have a really clear definition of supply chain, and should specifically include entities that are not linked to a company through contracts but do contribute to the company’s business’. In answer to question 15a, it notes: ‘The EU directive should apply to all businesses, including multinational enterprises, regardless of their size and sector’. It agrees with a legal requirement to conduct due diligence (question 2) and is in favour of liability and compensation in case of harm caused by not fulfilling due diligence duties (question 19a).

The entity calls for not focusing only on 'established business relationships'. However, it does not address the downstream value chain.

The entity points out that, 'the focus on ‘established business relationships’, is too limited from our perspective. It brings an extra spotlight to the practice of companies that often have a long-term relationship with their suppliers, while practices on so called ‘spotmarkets’ remain free from any due diligence obligations'.

The statement calls for not limiting due diligence to tier-1 suppliers.

It states that, 'the most salient ... risks and impacts often lie deeper in supply chains. A risk-based approach to due diligence is helpful to companies as this allows them to focus on where the real risks are, building on their knowledge of their own supply chains. By limiting due diligence to tier 1 suppliers, the Omnibus proposal may unintentionally promote the kind of “box ticking” compliance exercises that it intends to reduce'.

The entity criticises reliance on contractual clauses to discharge due diligence obligations, as it places the burden on suppliers.

The entity states that, 'the Directive’s focus on contracts makes that Due Diligence is being delegated downwards the supply chain, placing a burden on suppliers which can result in deteriorating working and environmental conditions. Due Diligence should be seen as a process of collaboration between supply chain partners -directly ánd indirectly linked- in the supply chain'.

The entity strongly agrees with a requirement for companies to identify stakeholders and their interests.

The Company strongly agrees with a requirement for companies to identify stakeholders and their interests (question 6). 6, It then states that: ‘The duty of care that directors owe to the Company already requires them in principle to address the abovementioned points, therefore a formalisation of such vaguely defined aspects of directors' duties will not likely have any effect on the directors. ... A more meaningful approach would be to clarify how the stakeholders' interests should be considered ... as well as from the perspective of the management of risks .... ‘It is important to note that the interest of external stakeholders of not being subjected to severely harmful effects caused by the company should take precedence over the interests of internal stakeholders. This is essential in ensuring that the agenda of internal stakeholders ... does not 'eclipse' the interests of the external stakeholders and society to avert severe harm'.

The entity strongly agrees that the EU should require directors to establish consultation channels for engaging with stakeholders.

The entity strongly agrees that the EU should require entities to establish consultation channels for engaging with stakeholders (question 20a). When asked about stakeholders that should be represented, it states that: 'All internal and external stakeholders, including those from local communities which are also rights holders in terms of corporate impact. Engagement processes should aim to understand how existing contexts and/or vulnerabilities may create disproportionate impacts for certain groups ... It is essential that the stakeholders are engaged at the level at which the effects of the economic activity may occur or are occurring'.

The entity strongly agrees with the requirement of directors having to manage the risks of the company in relation to stakeholders and their interests and calls for strict requirements.

The entity strongly agrees with the requirement of directors having to manage risks in relation to stakeholders and their interests as per question 6. It then states that, 'this of stakeholders' interests can be achieved by specifying directors' responsibilities with respect to: a) overseeing and ensuring the quality of the materiality determination … and due diligence processes (which should ideally be specified in the EU due diligence legislation); and b) determining the company’s strategy to address the risks and impacts identified by these processes, that is including: (i) material environmental and social risks and impacts to the company’s business model, operations and supply chain, and (ii) severe impacts to people and the planet identified by the company’s environmental and human rights due diligence in accordance with its legal obligations. … The purpose of such clarification is to ensure that the sustainability matters are duly considered at a strategic level, and that there is a transparency concerning their integration in the company's overall strategy that facilitates meaningful engagement of investors and stakeholders'.