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CSDDD in trialogue: thoroughness before speed

The voting process for a new EU supply chain directive is in the decisive phase. The planned provisions will result in far-reaching obligations for European companies that will significantly jeopardise their global competitiveness. The BDI is addressing its demands to the trialogue partners.

The European Union wants to promote sustainable and responsible activities of companies. The basis for this is the proposal published by the European Commission (COM) in February 2022 for a "Directive of the European Parliament and of the Council on corporate sustainability due diligence - 2019/1937" (Proposal for a Directive on Corporate Sustainability Due Diligence - CSDDD). The directive aims to take greater account of human rights and the environment in all value chains - both within and outside the EU.

Negotiations are progressing rapidly

All three EU institutions have now agreed their positions. The two co-EU legislators, the Council of the European Union (Council) and the European Parliament, have been discussing their position on the Commission's proposal intensively and under strong political pressure ever since. The Spanish Presidency has been leading the trilogue negotiations since July 2023. The declared aim is to finalise the negotiations by the end of 2023 in order to adopt the dossier before the 2024 European elections.

BDI demands for the trialogue

The economy needs manageable framework conditions. In its current form, the directive will lead to more bureaucracy, legal uncertainty and ultimately the withdrawal of European companies from value chains. This makes the necessary diversification of supply chains for security of supply more difficult.

BDI therefore believes that the three EU institutions must take the following points into account in the further negotiations:

  • In the event of the introduction of a civil liability regulation, which is undesirable from the BDI's point of view, this should essentially be limited to one's own attributable actions, as is already provided for in numerous national legal systems in the EU. In this area in particular, clear definitions for companies, also with regard to their risk management, are essential in terms of legal certainty.
  • In addition, the EU should introduce a liability privilege for slight negligence when participating in industry initiatives or using qualified certifications ("safe harbour"), as set out in Germany's protocol declaration on the general approach in December 2022. A liability privilege also creates incentives for companies to develop customised solutions as part of industry initiatives. In addition, there should also be a safe harbour clause or a whitelist for EU member states and other equivalent countries such as Canada or Japan.
  • Compliance with due diligence obligations should be limited to the supply chain and here to direct suppliers. A review of the entire value chain is practically impossible to implement and would inevitably lead to further over-bureaucratisation, not only for small and medium-sized enterprises (SMEs). Companies should also be able to prioritise the monitoring of due diligence obligations within the relationships with their direct suppliers (so-called risk-based approach).
  • Furthermore, the threshold for the scope of application should be at least 1,000 employees. The separate requirements specifically for members of company management should be deleted. Additional regulations in company law represent a superfluous duplication within the Directive and complicate its implementation for companies.
  • The trilogue partners must shorten and concretise the list of international agreements in the annex to the directive. International agreements primarily bind states and not companies. The due diligence obligations arising from international agreements must be manageable and legally secure for companies. They should be reduced to the clear rules of the UN Guiding Principles.

Thoroughness before speed

In the trialogue negotiations, the motto must now be: Thoroughness before speed! Even if the negotiating partners are under pressure from a legislative period that will soon be coming to an end and the Council Presidency, they must not rush into decisive legal issues relating to complex supply chain regulation.