Key messages
- Support a level playing field and avoid national fragmentation. Overall, Eurelectric welcomes the Commission’s initiative and perceives it as a much-needed step towards a sustainable corporate governance framework. It is of particular importance that a coherent EU framework is not further delayed, as divergent national initiatives have already emerged. Fragmentation of the EU internal market must be avoided, as this is a regulatory area that needs a common structure not only in the EU but beyond. Companies that integrate sustainability into their operations should not be exposed to unfair competition from companies (EU or third country) which do not take on this responsibility.
- Ensure legal certainty and a reasonable administrative burden. Legislation needs to be more explicit than international standards (OECD guidelines, UNGPs) and clearly set out the obligations imposed on companies.
- Install concrete definitions for successful implementation. The proposal in its current version still has several ambiguities regarding the obligations and responsibilities of companies and therefore requires further refinement to achieve greater harmonisation.
- Consider a two-tier model for direct and indirect suppliers, which also includes SMEs. To ensure feasibility and a realistic possibility of achieving the objectives of the Directive, Eurelectric suggests replacing the “value chain” with “supply chain” and to consider a two-tier model regarding responsibilities, distinguishing between broader and controllable due diligence requirements for direct suppliers and limited requirements for indirect suppliers.
- Focus on integrity, human rights and environmental due diligence. Although it is of high importance that the EU moves forward ambitiously in climate policy, the focus of the proposal should be on human rights, good business conduct and environmental due diligence.
- Avoid the inclusion of civil liability, as the introduction of extensive civil liability rules would create enormous legal uncertainty and the risk of excessive litigation for companies with complex supply chains. It is therefore important that both liability and sanctions are limited to where the company is directly linked to potentially adverse impacts. The enforcement mechanism should rely only on sanctions and administrative enforcement.
- Address the unclear functionality regarding directors’ duties. In principle, Eurelectric supports the idea that directors are encouraged to consider the consequences of their decisions regarding human rights, climate and the environment, however, the wording in the Commission’s proposal to introduce obligations for directors receives little support from the sector and appears inappropriate.
- Cohere with other legislation. Eurelectric supports efforts to establish coherence with other legislation, such as the currently debated Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy, as the due diligence proposal is closely related to them.
- Eurelectric is ready to contribute knowledge and expertise.