Meeting with
of BDA
Ref. Ares(2022)163127 - 11/01/2022
10/06/2021, 11:15
MEETING WITH
Confederation of German Employers’
Association (BDA)
Scene setter
− You are meeting with
Confederation of German
Employers’ Associations (BDA).
− BDA is the central German business association organising the social and economic policy
interests of the entire German economy, representing the interests of one million businesses
with around 20 million employees via voluntary membership of employer’s associations.
BDA has a joint representation in Brussels with the Federation of German Industries (BDI).
− The aim of the meeting is to discuss the Commission’s upcoming legislative proposal on
sustainable corporate governance.
− Recent contacts with BDA include:
• DG JUST (Alexandra Jour-Schröder, DDG) meeting with
BDA, 19 November 2020, and
• Your participation, by way of a video message, at the “International Business and
Human Rights Digital Conference: supply chains, human rights due diligence and the
way forward”, organised jointly by Deutsche Post DHL Group (that invited you), the
International Organisation of Employers (IOE) and BDA, 20 April 2021.
− The work on the
German law on supply chains (Lieferkettengesetz) is still ongoing in the
Bundestag. The adoption, originally scheduled for 20 May, was postponed.
On 27 May, the
governing parties agreed on a further compromise, paving the way for formal adoption
by the Bundestag in the second week of June (tbc).
− While the initiative has been gaining support in the business community,
in a statement
issued on 3 March 2021, the
BDA rejected the draft law for being too far-reaching and
creating legal uncertainty. They argued that companies would need to withdraw from
developing countries with a challenging human rights situation, harming those who would
need help. They were also worried about DE companies’ competitiveness in DE (with only
DE companies under the scope), in Europe and worldwide, and called for reducing the
burdensome requirements, limiting responsibilities with regard to indirect suppliers and not
extending liability.
− We understand that the political
compromise now includes: 1) clarifying that the duties
introduced by the supply chain law do not as such give rise to civil liability, while civil
liability established outside that law remains unaffected; 2) covering companies which do
not have their registered office or central place of administration in DE, have a branch in
DE and at least 3000 employees in DE.
− Contributions to the
open public consultation on the EU initiative and a summary of
factual findings are now published on the Commission’s better regulation portal. BDA
participated:
not supporting EU harmonisation of due diligence rules (although they see
the benefits of a level playing field), strongly oppose plans on directors’ duties and science-
based targets, and call for seeing first the effects of SRD2 on directors’ remuneration.
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Meeting with
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10/06/2021, 11:15
BDA’s position on the EU Sustainable Corporate Governance initiative:
• As regards
corporate due diligence, BDA acknowledges the potential benefits of EU
harmonisation buts is concerned that the rules would go
too far, e.g. not only covering
human rights but also
environmental impacts, and setting out
liability of EU companies
in EU courts for damages caused by their business partners in third countries.
• They call for an EU framework which enables an
international level playing field,
prevents the
risk of withdrawal from third countries, which is
risk-based, practical
and effective, which enables corporations to develop an
individual approach according
to the size, nature and structure of the organization, and
focus on tier 1 of the supply
chain outside the EU. It should be
uniform throughout the EU and establish rules for
non-European companies conducting business in the EU to ensure fair competition.
• A
smart mix of hard and soft law measures is needed that translates the duties of the
UNGP in a way that supports a culture of
cooperation, solution-building and mediation.
•
SMEs’ specificities should be taken into account. They should be provided with suitable
tools to implement due diligence obligations appropriately on a voluntary basis.
• Any new rules should be introduced only after the recovery from
COVID.
• Regarding
directors’ duties, BDA does
not see a need for additional incentives for
directors to balance stakeholders’ interest as this is already part of the measures of
successful management, and are worried because of the
threat of legal liability:
directors’ duties cannot be a checklist,
flexibility should be retained for different sectors,
companies
cannot carry out an exhaustive overview of all their stakeholders’
interests, a horizontally applicable definition of “stakeholder” is impossible to find.
Corporate governance codes, the NFRD and the Taxonomy Regulation already
cover several points, it is enough if directors take those into account in their decision-
making. Legal requirements could
disrupt decision-making in boards given that not all
the interests of stakeholders are fully compatible with each other.
• BDA argues that risks and opportunities of sustainability for companies are
already
reflected in corporate strategies today. Corporate decisions already take into account
ESG factors, beyond what is required by EU law, on own initiative (“all sustainability
dimensions need to be reflected in order to ensure sustainable and long-term success”),
increasing expectations of consumers, customers and financial investors or in order to
comply with
national law.
• Regarding board members’
remuneration, BDA finds that a
good balance was reached
in the recent Shareholder Rights Directive II which increased disclosure requirements
and introduced a shareholders’ say-on-pay and we should first see its impact. It should
remain for each individual company to decide how best to align executive remuneration
with its business model, strategy and long-term goals.
• BDA believes that the board
should regularly assess the level of expertise in its
organisation on sustainability matters and take appropriate follow-up, including regular
trainings but
legislation risks with creating a box-ticking exercise. The sustainability
(and digital) skillset of supervisory board members is expanding (also thanks to selection
criteria), and sustainability committees of supervisory boards are increasingly common.
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