Corporate Sustainability Due Diligence Directive (CSDD): due diligence obligations and liability risks should be proportionate
The European Commission's proposal for a directive provides for far-reaching corporate due diligence obligations in value chains to protect human rights and the environment. German insurers are committed to supporting a consistent and harmonised legal framework. However, to ensure its applicability and effectiveness, this framework must also take into account the specificities of the insurance sector and not create disproportionate duties of care or incalculable liability risks.
The European Commission's proposal for a directive aims to create a harmonised legal framework to encourage companies to identify, prevent, mitigate and remedy negative impacts on human rights and the environment in their value chains.
According to German insurers, this legislation will achieve its objective if the scope and content of due diligence obligations such as enforcement and liability mechanisms are clear, manageable, proportionate, and tailored to the companies' specificities targeted. At present, this proposal does not sufficiently fulfill these requirements for insurers. In particular, the association highlights the following aspects:
- Due diligence requirements for (re-) insurers should be limited to their own operations. Treating customers/clients as part of a value chain is not suitable for (re-) insurance and may inflict unintended consequences for residents and employees whom the CSDD seeks to protect, and other stakeholders not targeted by the CSDD.
- The scope of obliged entities should be narrowed by the due diligence regulations at Member State-level.
- It should be possible to comply with CSDD-requirements on a consolidated level.
- The establishment of a targeted and vaguely regulated civil liability regime should be abandoned as it would expose obliged entities to incalculable legal risk and impair the availability of liability insurance coverage.
- The CSDD should not incorporate general sustainability requirements which are not or only distinctly related to its primary objectives.