Today, the European Commission presents its long-awaited initiative on due diligence and directors’ duties. The new rules could have set a strong standard to lead companies in the EU on a path to climate neutrality and sustainable development. But important provisions in the proposal have been watered down. Without further clarification and strengthening of key provisions, the regulation will be ineffective in changing corporate behaviour.
“The introduction of mandatory due diligence rules is an important step towards curbing environmental damage or human rights violations in business operations,” says Maria van der Heide, Head of EU Policy at ShareAction.
“It is a real disappointment, however, that these rules only apply to large companies.* Human rights and environmental risks occur in operations and value chains of companies of all sizes. By excluding small and medium sized enterprises, which account for around 99 per cent of all EU companies, only a tiny percentage of the EU’s economy will have to identify and manage these risks to.”
Moreover, special exemptions are given to the financial industry, which will only need to execute simplified due diligence rules. The proposal deviates from international due diligence frameworks, that emphasise the need for all businesses to avoid and address negative impacts of their operations. Van der Heide adds: “The effectiveness of the due diligence system will be put at risk with this narrowed scope. The exemptions for the financial industry limit the positive impact that financial institutions can have by identifying and addressing risks to planet and people. It also sends a message to the financial sector that they don’t need to worry about these risks, when all the evidence points to the opposite.”
The recent call by more than 100 leading companies and investors for the inclusion of all businesses, including financial actors regardless of size, fell on deaf ears.
The directors’ duties part of the Directive has also been watered down significantly, compared to the Commission’s initial thinking.  Enhancing sustainability expertise in the board does not feature in the draft law for instance, and requirements for directors to engage with stakeholders have been weakened considerably.**
Nonetheless, the final package does include some positive measures. For example, it obliges companies to adopt a plan to ensure that their business model and strategy are compatible with the Paris Agreement, and to define emission reduction targets if climate change is considered a principal risk for the company. In addition, when companies set variable remuneration, this must be linked to transition and emission reduction objectives.
Van der Heide says: “Transition plans are an important step towards climate neutrality by 2050. Investors can use this information to determine how serious companies are about transitioning, and to redirect capital flows towards sustainable companies. Linking transition and emissions reduction plans to variable remuneration has the potential to put sustainability at the top of directors’ agendas. However, it is key that these rules are further clarified and strengthened to make sure that short-term financial considerations will not continue to override sustainability in directors’ decision-making.”
Other areas of concern in the proposal include the limited scope of civil liability, as well as the lack of clear criteria to consider climate risks, or requirements to set short-, medium- and long-term emission reduction targets.
This proposal will now be discussed in the European Parliament and Council.
Earthsight reveals that a year after the original investigation trade links between companies involved in indigenous rights violations in Brazil and European companies remain, highlighting the need for strong indigenous rights protections in the CSDDD.
Several EU member states have yet to decide on their position on some key aspects of the EU’s draft law to hold companies accountable for human rights and environmental violations throughout their value chain, slowing down the ongoing negotiations on the file.
As the first part of a briefing series by four NGOs, this policy brief examines the role of operational grievance mechanisms in the ongoing negotiations of the Corporate Sustainability Due Diligence Directive between the EU Commission, the EU Parliament and the EU Council. These mechanisms can play an important complementary role within a comprehensive remedy framework. An analysis of the three proposals shows that the position of the EU Parliament is most in line with these objectives. Therefore, this perspective should prevail in the EU trilogue negotiations. However, there is still scope for improving certain aspects of the EU Parliament's position.
The draft EU directive raises cautious optimism among civil society organisations working for the rights of people affected by corporate behaviours in third countries, however concerns remain that it could be diluted into a box-ticking exercise and limit access to justice for victims of corporate abuses.
This publication analyses the different legislative proposals for an EU Corporate Sustainability Due Diligence Directive, highlighting five key issues and making recommendations for the ongoing trilogue negotiations.
The negotiators agreed on some points this week, and the Spanish EU Council Presidency is expected to push on the talks starting in September in order to strike a deal before the end of the current term.
This piece seeks to inform the current debate by broadening the examples of sectors, products and services and current business practice which demonstrate the critical need for, and ability of, companies to consider human rights risks downstream.
More than 160 faith leaders worldwide, men and women from various faiths, have signed the statement urging European Union lawmakers to adopt a robust legal framework to hold companies accountable for environmental damage and human rights abuses.
This briefing addresses two main challenges for the Trilogues negotiations in order to allow for effective environmental and climate protection in the Corporate Sustainability Due Diligence Directive (CSDDD): 1. Listing environmental conventions does not provide adequate protection, and 2. tackling climate change is a critical part of environmental due diligence.
The position of the European Parliament supports the full respect for the United Nations Declaration on the Rights of Indigenous Peoples in the new CSDDD, says the Securing Indigenous Peoples’ Rights in the Green Economy (SIRGE) Coalition
EU governments should heed the call of businesses, civil society, and the multilateral institutions that built the due diligence normative framework to align their domestic law with the OECD Guidelines, including its latest updated text.
This policy briefing paper discusses the rationales for including more substantive provisions on engagement with stakeholders in general and with rights-holders in particular. It also pinpoints areas for improvement in the current draft and makes recommendations for strengthening the provisions on stakeholder engagement, proposing specific language for amendments in the final text of the directive.
NGOs including the European Coalition for Corporate Justice welcomed the vote as the position includes important improvements compared to previous drafts. Remaining weaknesses must be addressed in trilogue negotiations between Parliament, Council and Commission over the coming months.
GNI supports "key improvements" proposed by the JURI Committee. The multistakeholder initiative recommends that the Directive: (i) take a comprehensive approach to the scope of due diligence; (ii) adopt a risk-based approach across the full value chain, (iii) clarify key concepts such as meaningful stakeholder engagement, (iv) take a consistent and holistic approach to the scope of rights and sectors covered in line with international frameworks and existing expectations; and (v) help identify and incentivize participation in meaningful, credible multistakeholder initiatives.
The report has two key aims. The first is to express concern over the current trajectory
of HRDD legislation and its capacity to effect meaningful change for workers and trade unions. The second key aim of the report is to offer guidance on how HRDD could be legislated in such a way as to drive meaningful change for workers in transnational supply chains.
Briefing from Shift offering recommendations for the EU's Corporate Sustainability Due Diligence Directive based upon interviews with businesses and other stakeholders in Bangladesh, Kenya, Tanzania and Thailand.
This briefing outlines Amnesty International’s key concerns for the CSDDD, detailing where the proposals from the European Commission and the Council fail to live up to international human rights standards and what these gaps could mean for the victims of corporate harm. It also presents Amnesty’s key recommendations to address those gaps.
As the Parliament goes on to finalise its position and the trilogue process begins, the institutions must improve the text, ensuring that the role of human rights defenders and the risks they face are fully taken into account, says UN Special Rapporteur Mary Lawlor
MEPs are set to decide how to include the financial sector in the corporate due diligence directive on 1 June. Their decision could either strengthen or distort the European financial market and enable corporate abuses of people and the planet, Uku Lilleväli writes.
In this policy paper, FIAN outlines through examples in Guinea, Brazil and Cambodia why the CSDDD should apply to the financial sector, and the specific requirements that must be guaranteed to ensure its effective application.
MEPs agreed on the rules to be applied from the production to the sale, distribution and waste management of products or services provided by a company, leaving out due diligence and liability provisions regarding the use of products or services.
Polling reveals majority of Europeans across Austria, Belgium, Finland, France, Germany, Ireland, Netherlands, Poland, Slovenia and Spain want companies operating in the EU to be compelled to reduce emissions
EU lawmakers in the leading legal affairs committee of the European Parliament are expected to vote on their position on the proposed corporate accountability rules towards the end of April, although some key points remain open.
Reacting to reports that proposed EU business legislation will exempt companies from addressing the human rights risks linked to how their products are used, including arms, tools of torture or surveillance equipment, Amnesty International calls for the exemption on use to be reversed.
"A proposed EU law to prevent environmental and human rights abuses by multinationals has been cautiously welcomed by global Indigenous leaders seeking to highlight the damage done by extractive industries. However they say the text needs to go further if it is to protect Indigenous populations from mining companies."
The EU corporate sustainability due diligence directive represents a key opportunity to advance women’s rights and gender equality in companies’ international value chains. However, the draft text fails to integrate a gender lens and risks leaving women behind.
Even though the Chilean Andina mine is exacerbating the water shortage in the region, numerous European manufacturers of mining machines and mining equipment had business relationships with the mine. The case study shows why the legal regulation of due diligence obligations in downstream value chains is necessary within the framework of the currently discussed Corporate Sustainability Due Diligence Directive.
This report by the Global Business Initiative on Human Rights (GBI) provides key questions for companies to ask when establishing downstream human rights due diligence, and offers an overview of the expectations contained in international standards. Companies are already conducting due diligence in downstream contexts. Yet, in current policy debates at the EU and OECD, the scope of human rights due diligence is being contested
The European Parliament’s environment committee has voted to include an obligation for large companies and SMEs in certain risky sectors to risk-assess their global value chains for abuses like oil spills and pollution, but the improvements are not yet sufficient to prevent and end the vast impacts of companies on climate change, said the European Coalition for Corporate Justice.
In 2016, the Honduran environmental activist Berta Cáceres was killed trying to protect her ancestral lands against the Agua Zarca hydroelectric project, bankrolled by European financial institutions. The CSDDD could stop companies profiting from projects linked to the repression and murder of environmental defenders - but not if it lets investors off the hook, says Global Witness
In an interview with EURACTIV Lara Wolters highlighted that due diligence is also about downstream activities. According to her, this aspect has become even more relevant after the recent accusations that allege Qatar bribed European lawmakers. The rapporteur asserts that good governance, bribery and corruption should be part of due diligence discussions.
The study commissioned by The Left in the European Parliament sets out the various ways that subcontracting undermines labour laws in the EU and enables exploitation of workers. It among other things calls for a new European Regulation on decent work in the subcontracting chain and amending the Corporate Sustainability Due Diligence Directive.
ShareAction, Accountancy Europe, Eurosif, Frank Bold, Finance Watch and WWF, as members of the Informal Group on Sustainable Finance, have released a joint statement on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD).
After the adoption of a position by the Council, Amnesty International criticises that the exclusion of banks and financial institutions and waivers for companies that sell high-risk security equipment and surveillance technologies undermine the directive.
Ahead of Thursday’s (1 December) meeting of EU industry ministers, the fight over whether to include the financial sector in the scope of the Corporate Sustainability Due Diligence Directive (CSDDD) is still ongoing with France, Italy, and Spain threatening to block a common member state position.
The letter calls for a General Approach that covers the full value chain including downstream impacts and the full coverage of the financial sector; expands the scope of rights and impacts covered; and strengthens access to justice provisions and addresses barriers to justice often faced by claimants in business-related human rights and environmental cases.
The statement outlines four key areas which need particular attention if the Directive is to effectively aid in transforming the tech sector: scope of companies subject to the law; scope of rights; value chains and business relationships; and stakeholder engagement & access to justice and remedy
The European Commission’s proposal for a directive on corporate sustainability due diligence includes a dangerous overreliance on industry schemes, multi-stakeholder initiatives, and third-party auditing, a briefing paper by SOMO concludes.
On 24 November, Eurosif, the Investor Alliance for Human Rights and the PRI, supported by 142 signatories, released a statement of support for an ambitious and effective EU directive on corporate sustainability due diligence (CSDDD)
As EU member states close in on a common negotiating position on the Corporate Sustainability Due Diligence Directive (CSDDD), they are fighting over whether companies should do due diligence for their entire value chain or just the supply chain.
Luxembourg, Ireland and Germany have indicated they want to exclude asset managers and institutional investors from scope, with France and Italy going further and calling for the entire financial sector to be left out, an EU diplomat familiar with the negotiations said.
The EU’s long anticipated Directive on Corporate Sustainability Due Diligence is set to fail to hold ICT companies to account for human rights abuses and environmental damage if key shortcomings including on scope and stakeholder consultation are not addressed.
EU-based financiers and their subsidiaries have played central roles in financing projects that have caused human rights violations and environmental damage, and have been linked to land grabbing, deforestation, and violence against communities and land and environmental defenders.
UN Human Rights is concerned about the proposition being advanced by some stakeholders that the requirements of CS3D should not apply to downstream impacts on human rights that a company may be involved in. Such an exclusion would not align with the UNGPs and could undermine the international consensus about the scope of the Corporate Responsibility to Respect Human Rights.
On this page, you will find selected responses in support of effective legislation aligned with international standards from companies and business associations/initiatives who submitted feedback along with other respondents.
This piece argues that for legislation to succeed in advancing the rights of the most affected and to lead to better human rights outcomes for rights-holders, it is crucial to anchor such laws and regulations with not only the perspective of rights-holders but their ongoing involvement.
The in-depth analysis requested by the European Parliament's Subcommittee on Human Rights compares the Draft Directive proposed by the European Commission with the positions adopted by the European Parliament and by the Foreign Affairs Committee. It recommends various changes to the Draft Directive, for example in regards to the scope of human rights and environmental standards and the corporate due diligence duty and process.
OHCHR highlights five areas where they believe further attention and discussion are needed in
order to improve alignment with the UNGPs, and to create an EU regulatory framework that is capable of meeting the EU’s stated goals, including: company scope; subject-matter scope; taking action; compliance, enforcement and remedy; and stakeholder engagement.
An alliance of over 60 companies and initiatives are calling on the European Parliament, Commission and EU member states to ensure that living wages and incomes are included in the final corporate sustainability due diligence directive (EU CSDDD) and that their definitions should not be compromised.
While the draft directive has promising elements, we highlight considerable gaps that must be closed to ensure the law can fulfil its historic potential and bring tangible benefits for workers and communities along global value chains (also includes an overview of relevant resources).
The EU's directive on Corporate Sustainability Due Diligence could represent a landmark step forward, but the proposal contains significant flaws which risk preventing its urgently-needed positive impact for people, planet and climate. We join 220+ organisations calling for an effective law.
After a thorough internal analysis of the Directive’s content, as well as external consultations, ASI is now releasing a comprehensive analysis of the proposal for a directive on due diligence, with specific recommendations for the European Parliament and the European Council to strengthen it.
The briefing addresses shortcomings in the parts of the proposal that relate to corporate governance, directors’ obligations and the responsibilities of the financial sector and makes recommendations for appropriate changes.
The coalition successfully campaigned for a supply chain law in Germany. However, due to resistance from the business lobby, this law still has gaps and weaknesses, which is why an even stronger EU supply chain law is needed.
To close women’s month, 82 civil society organizations from across Europe sent an open letter to European Commissioners, Members of Parliament and Permanent Representations involved in the co-legislation of human rights and environmental due diligence legislation, urging them to make sure the gender-responsiveness gap is addressed.
DIHR examines foundational aspects such as personal and material scope, business relationships and the scope of due diligence across the value chain, use of contractual assurances as well as enforcement and liability. It then goes on to consider each element of the due diligence obligation.
This two-part blog explores in detail the EU's draft Directive on Corporate Sustainability Due Diligence, arguing it provides a strong legal basis to enhance corporate accountability and to create a standard for responsible and sustainable business conduct.
Letter sent to President von der Leyen and Commissioners Breton and Reynders by the International Labour Organization, the Organisation for Economic Co-operation and Development (OECD), and the Office of the UN High Commissioner for Human Rights (OHCHR).
With the right framing, a Directive could advance better outcomes for people and planet. However, for these significant opportunities to be realized, and for the Directive to meet its stated ambition, it is critical that the Directive is firmly grounded in the key international standards on sustainability due diligence adopted by the UN and the OECD.
ActionAid International raises concerns about the European Commission's proposal for a Sustainable Corporate Due Diligence Directive, specifically on the lack of inclusion of any reference to women and other marginalised groups
Frank Bold argues that the EU's legislative proposal on corporate accountability presents just some elements that foster integration of sustainability and long-term thinking in corporate governance rules, creating the risk of a tick-the-box exercise
The newly published Corporate Sustainability Due Diligence Directive falls short on involving workers and trade unions in shaping and monitoring sustainable business due diligence strategies, says the European Trade Union Confederation
The EU's proposal falls short on a number of fronts in its promise to promote sustainable business and investor practices and ensure accountability for harms, says the Investor Alliance for Human Rights
The Escazú Agreement and its principles must be integrated into the list of relevant international conventions that companies must comply with as part of the due diligence measures prescribed in the regulation, the organisations write.
Europe needs a Copernican Revolution in corporate behaviour to tackle the climate crisis and social disparities. To do that, the EU should start with clarifying the fundamentals of corporate law, the authors argue.
This compendium contains the contributions of experts that participated in a series of webinars exploring the topic of due diligence and its connections to civil liability, private international law, and sustainable finance, among other topics
The request, made on the 15th December 2021, asked for all correspondence and (e)meetings with stakeholders and members of the RSB, related to the proposal, as well as the RSB opinion and the Commission Impact Assessment.
14 industry associations and responsible business initiatives express their support for the EU’s objective to ensure respect for human rights and the environment through an EU-harmonised regulatory approach to due diligence.
MEPs Lara Wolters, Heidi Hautala, Manon Aubry and Pascal Durand have sent an access to document request to the Commission, requesting access to the 2 opinions of the Commission’s internal quality control body, the Regulatory Scrutiny Board and communication between interest groups and the RSB on the Commission’s Sustainable Corporate Governance initiative.
The European Commission should keep its promises and uphold corporate human rights obligations according to an open letter sent to President Ursula von der Leyen on 8 December signed by 47 civil society and trade union organisations.
In a debate in Parliament Dutch Minister for Foreign Trade and Development Cooperation announced that due to the "very disappointing" and "indefinite" delays at the European Commission, the Dutch government will immediately start work on ambitious national binding due diligence legislation.
On International Women Human Rights Defenders Day, over 60 civil society organisations sent an open letter to European Commissioners, Members of Parliament, and Council of the European Union Representatives, urging them to make the forthcoming corporate human rights and environmental due diligence law gender-responsive.
While the discussions on sustainable corporate governance and supply chain due diligence continue at EU level and a proposal for a directive has been postponed several times, Germany is sending a strong signal.
The struggle of the Lenca people, of Bertha and her daughter, is only one example of the daily struggle of indigenous and peasant communities to protect land, water sources, forests and our human family from the negative impacts of corporate activities. The upcoming Sustainable Corporate Governance proposal could be a game-changer for communities faced with corporate abuse worldwide.
Campaign calls on Commission Vice-President Věra Jourová, Commissioner for Justice Didier Reynders and Commissioner for the Internal Market Thierry Breton to introduce an ambitious legislative proposal on mandatory human rights and environmental due diligence.
In a letter to President von der Leyen, and Commissioners Reynders and Breton, MEPs stressed the importance of addressing barriers to justice for victims of corporate abuse in the upcoming due diligence law proposal
To effectively stop human rights violations and negative environmental impacts in global supply chains, EU policymakers should ensure the upcoming legislation leads to positive impacts for rightsholders and improves the situation and the livelihoods of smallholders.
In her letter to the presidents of EPP, S&D, Renew, GreensEFA and the Left political groups, President Von der Leyen stresses the importance of ensuring consistency in developing a sustainable framework for economic operators, and that the initiative will be adopted in 2021
"By passing world-leading legislation now to ensure transparency, liability for environmental and human rights abuses and remedy for the individuals affected, the EU can point the way to a safer, more sustainable planet, and establish frontrunner status in sustainability and justice" - MEP Toine Manders, European People's Party, and Steve Trent, Environmental Justice Foundation
The note provides recommendations in light of the European Parliament's resolution of 10 March 2021 on corporate due diligence and corporate accountability, focusing in particular on issues connected with the translation of human rights due diligence into a binding legal standard, and on corporate accountability and remedy.
The undersigned Members of the European Parliament sent a letter to President von der Leyen and 13 commissioners reiterating some of the key demands of the European Parliament’s legislative own-initiative resolution regarding the upcoming proposal on Sustainable Corporate Governance.
The briefing follows a public letter sent by NGOs to DG Justice Commissioner Didier Reynders and Executive Vice-President Frans Timmermans in support of the EU Commission plans on Sustainable Corporate Governance.
The fate of the proposals on (i) minimising the risk of deforestation and forest degradation associated with products placed on the EU market and (ii) sustainable corporate governance is now unclear, raising concerns among civil society.
Ferrero, Mars Wrigley, Mondelez International, Nestlé, Tony’s Chocolonely & Unilever shared a joint letter to Commissioners Reynders, Breton and Sinkevičius, calling for the adoption of a legislative proposal without further delay.
Eight years on from the Rana Plaza building collapse, many European fashion companies are still linked to human rights abuses on a daily basis. For an EU due diligence law to make a difference, it can’t just be a list of boxes companies must tick.
The organisations call on the EU to ensure that its upcoming legislative measures are effective and fully uphold their rights as set out in international law, and in line with the EU’s own commitments.
EU Financial Stability Commissioner Mairead McGuiness and Justice Commissioner Didier Reynders explain the importance of aligning the due diligence law proposal with reforms to the non-financial reporting directive (NRFD) if companies are to effectively be held to account
Over half a million people around the globe have demanded a strong EU law to hold corporations accountable for their impact on human rights, including trade union and workers’ rights, and the environment. These demands were made as part of the public consultation launched by the EU Commission.
John Ruggie voices three reservations: (1) directors are not the main driver of short-termism; (2) opposition to addressing directors’ duties may jeopardize the initiative; and (3) doing so may be largely unnecessary, as properly designed mandatory due diligence will itself change directors’ duties, he writes.
The European Commission hold a virtual exchange with three business & human rights advocates from the Global South as part of a public consultation for the proposed corporate human rights and environmental due diligence law
The European Commission is considering a new law to hold businesses accountable for their impact on people and the planet. To support people in participating in the EU's consultation on mandatory due diligence, Friends of the Earth, the European Trade Union Confederation, Arbeiterkammer Europa (AK Europa), Österreichischer Gewerkschaftsbund (OGB) and the European Coalition for Corporate Justice (ECCJ) have launched a new website.
As the European Parliament begins developing proposals for a new – and momentous – law to hold business to account for its impact on people and planet, Richard Gardiner from Global Witness sets out how this process came about and what needs to happen now to ensure this really delivers results.