Given the developments of the recent political negotiations, ESBG has decided to update its position paper on the Corporate Sustainability Due Diligence Directive (CSDDD) with five main recommendations to be considered.
First of all, ESBG calls for reconsidering the scope(s) and supports lifting the employee threshold to 1000. Moreover, for competitiveness purposes, ESBG calls to narrow the gap between the suggested thresholds for EU and non-EU companies. ESBG has also concerns regarding the scope of the “adverse impact” listed in the annexes and ask to narrow it. Finally, ESBG strongly opposes the inclusion of the financial entities in the list of high-risk-sectors.
ESBG insists on limiting the value chain to the direct customers receiving loans or credits only, not to their subsidiaries or business partners. Also, loans or credits provided to SMEs, natural persons and households should not be covered by the value chain.
ESBG is in favour of the implementation of a risk-based approach when conducting the due diligence for financial undertakings. ESBG proposes including a differentiation between simplified and enhanced due diligence rules depending on the risk profile of a customer. For instance, it could make sense to prioritize identification of entities established in countries/regions more likely to generate “high adverse impacts”.
Regarding the specific role of financial undertakings, ESBG strongly urges to keep the identification obligation limited to before providing loans or credits. Finally, ESBG stresses the need to consider the specific structure of mutualist banking groups.
A coherent frame that makes the rules work will also be welcomed. Overall, ESBG encourages the legislators to coordinate their progress with other current projects, such as the EU taxonomy, corporate sustainability reporting directive, deforestation regulation and conflict minerals regulation.
Finally, ensuring legal certainty is key. Therefore, ESBG discommends the inclusion of specific provisions related to civil liability under the proposed CSDDD, notably because it could lead to a permanent litigation risk as well as the directors’ duty of care. In this regard, ESBG also recommends that the substantiation of concerns is eliminated.
