Accountancy Europe calls for an ambitious EU due diligence framework

We commend the European Parliament’s (EP) legal affairs committee (JURI) for adopting its position on the Corporate Sustainability Due Diligence Directive (Directive).

The EP, Council and European Commission (EC) have shown great commitment to move forward with this file. The EU is now one step closer to having a legal framework that helps better protecting the environment and human rights from adverse impacts.

“We call on both the Council and EP to uphold a high level of ambition for the upcoming “trilogue” negotiations. We urge them to ensure clear and consistent requirements for the Directive but also coherence with existing legislation. This is crucial to meet the Directive’s objectives. Trilogues must follow the better regulation principles and reduce the number of last-minute politically motivated un-impact-assessed changes,” says Olivier Boutellis-Taft, Accountancy Europe CEO.

We specifically recommend to:

Support affected SMEs

Guidelines and tools are needed to support SMEs affected by the Directive through value chains. These guidelines must be targeted and clear. We call on the EU institutions to continue dialogue with these SMEs to ensure supporting mechanisms fit their needs. The EC should also assess the Directive’s impact on SMEs in the future, and SMEs should be allowed to apply the Directive on a voluntary basis.

Maintain Directors’ role and duties

Directors should be in charge of applying the Directive in the way that is the most effective and the fittest to their companies. They will need to establish new processes to ensure compliance with the provisions. Directors’ role and guidance is important for companies to prevent adverse effects throughout their operations and related sanctions.

Set up high quality independent third-party verification

Third party verification of the companies’ obligations is an important supporting tool to help them fulfil their duties and ensure companies’ value chains are free from environmental and human rights violations. Minimum requirements for high-quality, consistent and transparent independent third-party verification are needed to ensure the Directive’s proper application and avoid green and social washing.

Ensure workable rules for civil liability enforcement 

The Directive’s civil liability provisions for companies that fail to comply with the obligations are also instrumental. Lawmakers must clarify under which conditions civil liability arises and consider the means companies have in their disposal to mitigate or resolve damages in their value chain. Provisions enforcing fair access to justice for victims/claimants will also be key.