ESIP Statement on the proposal for a Directive on corporate sustainability due diligence

A proposal for a Directive on corporate due diligence, with the aim of ensuring companies mitigating adverse human rights and environmental impacts in their value chains and integrate sustainability into corporate governance was recently put forward by the European Commission. The European Social Insurance Platform (ESIP) would like to alert EU policymakers to the scope of the proposal and its extension to statutory pension institutions which are operating social security schemes.

Indeed, the legal basis for the proposal is article 50 and article 114 of the Treaty on the Functioning of the European Union (TFEU), on the EU’s competence to attain freedom of establishment and safeguards required by Member States of firms or companies. The definition of companies in article 54 of the TFEU specifically excludes legal persons that are non-profit making.

Furthermore, in article 3(a)(IV) of the draft proposal, the definition of company is extended to “pension institutions operating pension schemes which are considered to be social security schemes covered by Regulation (EC) No 883/2004 […] and Regulation (EC) No 987/2009 […] as well as any legal entity set up for the purpose of investment of such schemes”. Including in this manner statutory pension institutions that ESIP represents within the definition of “company” in this proposal constitutes a serious break away from the understanding of a company following the jurisprudence of the Court of Justice of the European Union[1] which was reflected in prior EU legislation[2].

It is clear that the activities of pensions institutions operating pension schemes which are social security schemes under strict state supervision, do not qualify them as companies or undertaking. Therefore, ESIP strongly recommends to EU legislators to delete the provision of article 3 (a)(IV) and exclude pension schemes considered as social security schemes under social security coordination rules from the scope of this directive.

Our full statement is available here.  


[1] See judgment in case C-159/91, further confirmed in cases C-262/18 and C-271/18

[2] This is particularly the case in EU legislation on the activities of insurance and reinsurance undertakings set in Directive 2009/138/EC in its subsection 1, article 3 stating that "(…) this Directive shall not apply to insurance forming part of a statutory system of social security."