The Swiss Finance Council has co-signed joint amendments to CSDDD proposal, whose aim is to propose a more proportionate scope of application for non-EU companies.
The proposed CSDDD will impact the global business operations of non-EU companies active in the EU, covering their governance and organisation. The CSDDD has also the potential to cover business activities that do not have any connection with the EU, for example a loan from a non-EU bank to a non-EU business with activities exclusively outside the EU. These activities, which have no nexus to the EU, are not capable of affecting the EU internal market. Nevertheless, these activities often represent the majority of the business activities of non-EU companies. Such extraterritorial scope of application would be excessive, raise serious jurisdictional conflicts and enforcement challenges, and represent a disproportionate burden for non-EU companies.
Moreover, non-EU companies are subject to the jurisdiction of their home country and to the laws and regulations applied to them by those jurisdictions as well as other jurisdictions where they have a presence and operate. As a result, non-EU companies are already subject to environmental and human rights due diligence obligations in their home and other jurisdictions of establishment or will be according to relevant legislative and regulatory initiatives. The extraterritorial application of the CSDDD is therefore likely to create overlapping and conflicting requirements of due diligence obligations and significant problems for global companies. For example, companies might be held liable for the same environmental damage or human rights infringement under different legal systems, creating legal uncertainty and a disproportionate burden for businesses.
For these reasons, we propose to limit the due diligence obligations for non-EU companies that have an EU presence (subsidiary or branch) to the value chain operations related to goods sold and services provided in the EU. This clarification would guarantee a level playing field in the EU, while limiting the conflicts with similar obligations in third countries and facilitating enforcement. Our other amendments cover the definition of “operations” and transition plans.
