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27 Feb 2024

M. Streibelt, D. Schönfelder, C. Bright et al., Nova Centre on Business, Human Rights and the Environment Blog (EN) / M. Streibelt & D. Schönfelder, Haufe Sustainability (DE)

Common rules for the common market – the CSDDD is needed for businesses and human rights

The Corporate Sustainability Due Diligence Directive (CSDDD) is on the Council’s agenda for this week, which might be one of the last chances for the urgently needed directive to be adopted before the EP elections. There still seems to be a lack of understanding regarding the substantive arguments raised by some in criticism of the directive. Upon closer investigation, these arguments are based on an inaccurate understanding of the law. As professionals working with companies on how to implement human rights in their activities and supply chains, the authors of this text address them from a practical standpoint.

It is also worth remembering from the outset that, in the seminal study on due diligence through the supply chain, the vast majority of stakeholders (including notably  businesses, civil society, academics and government officials) were in favour of the introduction of mandatory due diligence at the European level in order to identify, prevent and address the adverse human rights and environmental impacts that companies can have in their operations and throughout their global value chains. [...]

A bureaucracy monster, harmful to companies?

Some political parties and business associations have criticised the directive and alleged it would overly burden companies, especially SMEs. It has also been wrongly argued that the directive requires companies to guarantee that there are no potential or actual adverse impacts in their supply chain. That would indeed be impossible. However, a careful analysis of the directive shows that it does in fact not set forth such requirements. On the contrary, and in line with international standards in the field which impose an obligation of means and not an obligation of result, the directive simply requires companies to put in place due diligence processes which are appropriate to their size and influence, including the possibility to prioritize the most severe risks. [...]

Level playing field and uniform standard instead of patchwork legislation

The CSDDD would create a common standard for the common market of the EU. [...]

Withdrawal from difficult regions?

The CSDDD does not require European companies to withdraw from difficult at risk countries, regions, supply chains or suppliers. Instead, in line with international standards, the directive provides that termination should be used only as a matter of last resort and guarantee a responsible exit. [...]

Clear rules on civil liability create legal security

Among the most misleading claims in relation to the CSDDD is that companies will face unmanageable and unreasonable liability risks. In fact, it is quite the opposite since exercising appropriate human rights and environmental due diligence is actually the best way for companies to protect themselves from liability. As a result, by setting out requirements and clear expectations for companies in relation to due diligence, the CSDDD helps them address the liability risk. [...]

Corporate sustainability with or without the CSDDD

Whether or not the CSDDD is adopted, companies are already and will increasingly be subjected to expectations and requirements to put in place due diligence processes to ensure that they do not harm human rights and the environment in their operations and throughout their supply chains. [...]