EU: Parliament-commissioned comparative analysis of draft Due Diligence Directive highlights areas of concern
"Commission proposal on corporate sustainability due diligence: analysis from a human rights perspective", 7. June 2022
On 23 February 2022, the European Commission (EC) published its proposal for a corporate sustainability due diligence directive. This In-depth Analysis for the European Parliament Sub-Committee on Human Rights (DROI) initially presents the EC proposal and its main features, contextualising these against broader European and international developments in business and human rights regulations. It then undertakes an in-depth comparative analysis of the EC’s 2022 draft Directive against (i) the position adopted by the Foreign Affairs Committee (AFET/DROI) in its opinion for the Legal Affairs Committee of 25 November 2020; (ii) the final EP position as adopted in March 2021. This is followed by evaluation of the EC draft Directive’s approach on key elements relating to human rights and environmental due diligence from the point of view of human rights standards and in light of the rationale presented in the EC’s Impact Assessment Report (23 February 2022) and Annexes (29 March 2022). Overall, the analysis provides an assessment of the extent to which key positions of AFET/DROI and the Parliament regarding human rights due diligence, as well as relevant international and regional legal standards, policies and guidance, are either reflected in the EC draft Directive or might be better reflected in it.
The EC draft Directive embodies some steps forward in the legal regulation of corporate human rights and environmental due diligence that are of potentially global significance, given its establishment of binding legal due diligence duties for companies; its scope in terms of companies and geography; the economic significance of activities covered; and the robust provisions envisaged regarding prevention, monitoring, enforcement and remediation.However, as identified in the above analysis, on some important parameters the draft Directive falls short of the expectations of the UNGPs, and existing EU legal obligations as well as policy commitments, while aspects of its overall scheme may entail implementation and enforcement challenges. In certain other respects the draft Directive fails to carry forward elements of the AFET/DROI opinion and EP final position that could plausibly strengthen its effectiveness and impact, directly and indirectly, in relation to EU human rights and sustainable development commitments. While recognising the complexities of regulation in this area, the many merits of the EC draft Directive and the inevitability of certain trade-offs between policy objectives, further dialogue is now warranted to consider how such shortcomings can be addressed. To this end, the current analysis has highlighted areas of concerns as well as some avenues towards solutions for consideration by Members of the European Parliament and stakeholders.