EU companies need workable rules on corporate due diligence
Today, the European Commission presented its proposal on sustainable corporate due diligence. It will impose new obligations on companies and on how they monitor and operate in their supply chains, alongside new duties for directors.
BusinessEurope’s President Pierre Gattaz said: "European business supports an EU framework on due diligence and many companies across the continent are already living up to their respective responsibilities. But the aim to make supply chains more sustainable needs to be achieved in a way that is workable for companies and must not unilaterally make European companies responsible for factors way beyond their control.
Today’s Commission proposal falls short of delivering workable rules for businesses in many aspects. Unfortunately, this proposal adds to the already excessive cumulative burden imposed on European business over the last years. It is unrealistic to expect that European companies can control their entire value chains across the world, including “indirect” third party suppliers or even customers.
Ultimately these proposals will harm our companies’ ability to remain competitive worldwide and to continue to act as ambassadors of European values, bringing benefits to local communities in third countries.
The intrusion into the careful balance on directors’ duties creates the risk to disrupt the primary function of boards, in accordance with national company laws.
We acknowledge the aim to partly exclude SMEs from the proposed obligations, but they still will be impacted and burdened indirectly.
The inclusion of the financial sector bears the risk of unwanted effects and could cause another access to finance problem for the European real economy.
The Commission proposal also includes a lot of complex and unclear terminology. It leaves too much room for EU Member States to add-on, which could eventually lead to a patchwork of rules undermining one of the initiative’s main objectives: the prevention of fragmentation of rules within the single market.
We call on legislators to transform this suboptimal proposal into workable solutions. European business stands ready to constructively work with them on workable rules on corporate due diligence."