No need for EU to add new duties for directors

Adding a new layer of directors’ duties in the EU’s Corporate Sustainability Due Diligence Directive (CS3D) would create confusion and complexity, according to a joint survey by ecoDa and Allen & Overy.

Releasing a new report, they suggest that the EU already has diverse rules on directors’ liability across its member states, which appear to function reasonably well within their respective legal systems. ecoDa added that it therefore welcomes the prospect that the trilogue negotiations should drop the articles on directors’ duties from the draft directive. 

The new survey from Allen & Overy and ecoDa shows that there are many different approaches to directors’ liability across the fifteen jurisdictions investigated. This multi-jurisdiction survey on directors’ liabilities tends to analyse what directors’ liability exactly entail in the different jurisdictions. 

As Bart De Bock, senior associate at Allen & Overy says: “It appears that many diverse liability frameworks apply different rules on the damage requirement, on causal link, on the burden of proof, on how to make derivative claims, and to initiate tort liability cases.”

The need to withdraw articles explicitly referring to directors’ duties from the CS3D makes all the more sense for Pascal Durand-Barthez, chair of ecoDa’s Advocacy Committee since “in most jurisdictions, the law does not distinguish between mismanagement wrongdoings which specifically relate to sustainability or other causes”. 

However, it goes without saying that the significant increase in environmental and social obligations related obligations for companies, are or at least should be, an important concern for directors, the report suggests.