Corporate sustainability due diligence – it is high time to secure a framework that works in practice

With several outstanding matters of considerable relevance to European businesses, now is the time to remain focused on making this legislation the best it can be. However, we see a risk that perceived pressure on the legislators to finalise the negotiations may lead to solutions that are not possible to apply in practice or have substantial negative unintended consequences. 

In our opinion, now is not the time to rush and compromise on quality on such issues, given that they are central both to creating a workable Directive and to the competitiveness of European companies.

The Confederation of Swedish Enterprise therefore encourages the legislators to remain focused on the issues that really matter. In our view, a few fundamental, priority issues for a workable Directive are the following: 

• Delete the provisions regulating Corporate Governance. Such provisions will create substantial negative side-effects. These include the disruption of existing, well-established governance models in the Member States, without added value to the capacity of companies to apply effective due diligence (art. 8a, art. 15(3), art. 25 and art. 26).
• Ensure harmonisation of key due diligence provisions, specifically arts. 4 – 8. This will not lower standards nor lead to a race to the bottom. On the contrary, this is necessary to safeguard the proper functioning of the Single Market.
• Support the Council’s version of civil liability. This would align with the legal frameworks of the Member States and would avoid creating wide open litigation powers that risk leading to mass abusive litigation (art. 22).
• Reject the European Parliament’s proposals on the powers of supervisory authorities and the sanctions system (art. 17, art. 18, art 20), in order to safeguard the proportional application of the Directive. 
• Ensure that collective agreement insurance systems for the benefit of employees are excluded from the scope of the Directive, as this would otherwise undermine the very rights that it aims to protect.