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The (non-exhaustive) examples below on protections and opportunities for small and medium-sized enterprises (SMEs) from the Global North and South are from the Corporate Sustainability Due Diligence Directive (CSDDD)Trilogue compromise agreement.
Supporting SME suppliers and enabling positive change in value chains through adjustments to own purchasing practices (delivery times, payment terms etc.) as parts of in-scope companies' due diligence (due diligence≠ policing/auditing)
Article 7 (2) / Article 8 (3): Companies [in scope] shall be required to take the following appropriate measures [to prevent, mitigate, bring to an end or minimise potential or actual abuse], where relevant: [...]
(ca) / (da) make necessary modifications of, or improvements to, the company’s own business plan, overall strategies and operations, including purchasing practices, design and distribution practices;
(d) / (e) provide targeted and proportionate support for an SME which is a business partner of the company, where necessary in light of the resources, knowledge and constraints of the SME, including by providing or enabling access to capacity-building, training or upgrading management systems, and, where compliance with the code of conduct or the prevention action plan would jeopardise the viability of the SME, providing targeted and proportionate financial support, such as direct financing, low-interest loans, guarantees of continued sourcing, or assistance in securing financing
Recital 34 / 39: [...] Where relevant, companies should adapt business plans, overall strategies and operations, including purchasing practices, and develop and use purchase policies that contribute to living wages and incomes for their suppliers, and that do not encourage potential / actual adverse impacts on human rights or the environment. [...] Such measures could also be relevant to address adverse impacts that are jointly caused by the company and its business partner, for instance due to the deadlines or specifications imposed on it by the company. Also, by better sharing the value along the chain of activities, responsible purchasing or distribution practices contribute to fighting against child labour, which often arises in countries or territories with high poverty levels. [...]
Fair contracts with SME partners accompanied by support measures
Article 7 (4) / Article 8 (5): [...] When contractual assurances are obtained from, or a contract is entered into, with an SME, the terms used shall be fair, reasonable and non-discriminatory. The company shall also assess whether the contractual assurances with an SME should be accompanied by some of the appropriate measures for SMEs included in paragraph 2, point (d) / paragraph 3, point (e) [see above]. [...]
Recital 34 / 39: [...] Contractual assurances should be designed to ensure that responsibilities areshared appropriately by the company and the business partners. [...]
Recital 45: [T]he Commission, in consultation with Member States and stakeholders, should provide guidance on model contractual clauses [...]. The guidance should aim to facilitate a clear allocation of tasks between contracting parties and ongoing cooperation, in a way that avoids the transfer of the obligations of this Directive to a business partner and automatically rendering the contract void in case of a breach. The guidance should reflect the principle that the mere use of contractual assurances cannot, on its own, satisfy the due diligence standards of this Directive. [...]
SMEs are not included in the personal scope of the EU's Corporate Sustainability Due Diligence Directive (CSDDD), which means they are not subject to its formal provisions. The law acknowledges they might still be indirectly impacted as business relationships of companies in scope, and therefore considers their particularities and includes protections - much more comprehensively than, for instance, the German Supply Chain Act. In practice, this means the CSDDD represents a tangible opportunity for effective and fair collaboration between larger and smaller companies on human rights and environmental issues along value chains, in line with the international standards. The directive is a key moment for rightsholders, and a chance for SMEs to become more sustainable and resilient, as value chain partners.
Johannes Blankenbach, EU/Western Europe Researcher & Representative, BHRRC
Sharing of audit costs and results
Article 7 (4) / Article 8 (5): [...] Where measures to verify compliance are carried out in relation to SMEs, the [in-scope] company shall bear the cost of the independent third-party verification. In case the SME requests to pay at least a part of the cost, or in agreement with the company, the SME shall be able to share the results of verifications with other companies. [...]
Exercising restraint regarding requests for information from smaller companies
Recital 30: [...] With a view to limiting the burden on smaller companies created by requests for information [...], companies should exercise restraint with regard to business partners that do not themselves present risks of adverse impacts and privilege reaching out, where reasonable, directly for more detailed information to business partners at levels in the chain of activities where [...] potential or actual adverse impacts are most likely to occur. [...]
Article 6 (4b): Where information necessary for the in-depth assessment according to paragraph (1a), point (b) can be obtained from business partners at different levels of the chain of activities, the company shall prioritise requesting such information, where reasonable, directly from business partners where the adverse impacts are most likely to occur.
Engagement with business partners over disengagement
Recital 36 / 41: [...] In order to ensure that appropriate measures for the prevention and mitigation of potential adverse impacts / bringing to an end or minimising of actual adverse impacts are effective, companies should prioritize engagementwith business partners in their chain of activities, instead of terminating the business relationship, as a last resort action after attempting at preventing and mitigating adverse potential impacts without success / to bring actual adverse impacts to an end or minimise their extent without success. Factors determining the appropriateness of the timeline for adoption and implementation of [enhanced prevention/correction, suspension or responsible disengagement] actions could include the severity of the adverse impact [...] as well as impacts on SMEs or smallholders. [...] Where companies do temporarily suspend or terminate the business relationship, they should take steps to prevent, mitigate, or bring to an end the impacts of suspension or termination, provide reasonable notice to the business partner and keep that decision under review. [...]
Article 7 (5) (b) / 8 (6) (b): [...] Prior to temporarily suspending or terminating the business relationship, the company shall assess whether the adverse impacts of doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated / brought to an end or the extent of which could not be adequately minimised. Should that be the case, the company shall not be required to suspend or to terminate the business relationship, and shall be in a position to report to the competent supervisory authority about the duly justified reasons of such decision. [...]
Accompanying public support measures for businesses, especially SMEs
Article 14 (1): Member States shall, in order to provide information and support to companies, their business partners and stakeholders, set up and operate individually or jointly dedicated websites, platforms or portals. Specific consideration shall be given, in that respect, to the SMEs that are present in the chains of activities of companies. [...]
Article 14 (2): Without prejudice to applicable State aid rules, Member States may financially support SMEs. Member States may also provide support to stakeholders for the purpose of facilitating the exercise of the rights laid down in this Directive.
Article 14 (3): The Commission may complement Member States’ support measures building on existing Union action to support due diligence in the Union and in third countries and may devise new measures, including facilitation of joint stakeholder initiatives [...].
Article 14a (1): The Commission shall establish a single helpdesk through which companies may seek information, guidance and support [...].
This publication aims to give an overview of the various EU regulatory initiatives of relevance to business and human rights in force or under development by the EU, how they align with international frameworks, such as the UN Guiding Principles on Business and Human Rights, and how the various pieces fit in the puzzle.
The European Parliament has adopted new laws to rein in companies for human rights abuses in global supply chains. This will have far-reaching impacts on Switzerland’s largest companies.
This publication by the Danish Institute for Human Rights summarises the key elements of the CSDDD, considers steps for effective implementation, and recommends strategies for aligning with the UNGPs
Overview of business voice in support of mandatory due diligence, notably the EU's Corporate Sustainability Due Diligence Directive (CSDDD), since February 2024
Ahead of the European Parliament's final vote on the legislation on 24 April, more than 90 large companies, SMEs and networks including Maersk, Cisco, Nokia, H&M Group, Scania and Ritter Sport have united to endorse the Corporate Sustainability Due Diligence Directive (CSDDD) and call on EU decision makers to now finally adopt it.
Stéphane Brabant, Senior Partner at Trinity International AARPi, and Eugénie Denat, summarise the most essential provisions of the CSDDD in order to reassure businesses about the application of the directive and its content.
In this briefing, ECCJ, CAN Europe, Reclaim Finance, Frank Bold, ECCHR and ClientEarth address some of the main myths around the CSDDD and lay out the importance of this law in finally holding European corporations accountable.
The preliminary endorsement by member states of the Forced Labour Regulation ramps up pressure on wavering countries to also endorse CSDDD on Friday, reducing the political room to justify continued resistance to the law.
In March 2024, over 50 representatives from businesses including Ferrero, Mondelez Italia and Mars, associations and NGOs, urged the Italian Government to support the CSDDD ahead of another - and potentially the last - chance to secure EU Council endorsement. This statement joins a chorus of voices from across large and small businesses, associations, academia, and civil society in support of the CSDDD.
EU negotiators went back to the drawing board over the weekend to bulletproof the text of the bloc’s corporate due diligence law (CSDDD) in the hope of securing a final deal by Friday (15 March) at the latest, Euractiv understands.
Failure to agree an ambitious EU Corporate Sustainable Due Diligence Directive will lead to greater fragmentation of corporate accountability legislation, fail to protect lives and the environment, and make life harder for companies and investors
The delay in approving a new EU directive does a disservice to companies that need legal certainty, says chair of the UN working group on business and human rights Robert McCorquodale
Ahead of the European Union vote on whether to adopt the Corporate Sustainability and Due Diligence Directive (CSDDD), ICAR, joined by 69 other partner organizations around the world, sent the following letter urging European countries to vote in favor of a strong due diligence directive.
The Uganda Consortium on Corporate Accountability (UCCA) released a statement to express their disappointment over the Committee of the Permanent Representatives of the Governments of the Member States to the European Union (COREPER) failure to reach a final agreement on Corporate Sustainability Due Diligence Directive (CS3D).
While an attempt was made to approve the directive in Council today, these efforts were reportedly derailed further by a last minute effort by France to significantly scale back the scope of the new rules to apply only to companies with more than 5,000 employees, instead of the proposed 500 employee threshold.
The joint civil society statement highlights the vital nature of the EU sustainability legislation - necessary and overdue to trigger the change in business conduct - and the need to maintain collective pressure to avoid compromising key principles in subsequent decisions.
At the last minute, France made an impossible demand of the negotiators, calling into question the compromise agreement reached after several years of hard work by the Member States, the European Parliament, and the Commission, says ECCJ
"It is precisely in times of political crisis and economic challenges that defending the universal rights and fundamental values that unite us can strengthen the foundation for a brighter future", the statement says.
Non-exhaustive examples showing how questions of effectiveness, supply network/value chain complexity, and feasibility for companies have been addressed by the Corporate Sustainability Due Diligence Directive (CSDDD).
The CSDDD is a world-leading initiative to put internationally agreed standards of corporate behaviour from the UN and OECD into law, write MEP Heidi Hautala and BHR experts Olena Uvarova and Ihor Konopka.
In a joint statement, 26 companies and networks urgently call on the German Chancellor to agree to the political agreement on the Corporate Sustainability Due Diligence Directive (CSDDD). ALDI SÜD, Bayer, Primark, FRoSTA, KiK, Mars, Tchibo, VAUDE, Ritter Sport and the Global Network Initiative are among those affirming business support for the text agreed in December 2023.
In a blog post, a group of BHR scholars and practitioners explain why the CSDDD is needed for businesses and human rights and address some of the most common misconceptions about the text.
The rapporteur wrote a letter to Italian Prime Minister Giorgia Meloni to express her serious concern at reports Italy may block the EU’s proposed new rules on human rights and environmental due diligence for companies. She called on the Italian Government to fully support the proposed Directive.
The adoption of the Directive would represent a significant advance in the global efforts to respect, protect, and fulfill children’s rights and human rights, support gender equality and address environmental challenges, as well as boost efforts to create a level playing field for businesses, the statement says.
Businesses (including Ferrero) as well as other stakeholders call on the Italian Government to support the Corporate Sustainability Due Diligence Directive.
WBCSD brings together over 225 of the world’s largest, most forward-thinking companies working together to accelerate the transition to a sustainable world.
Non-exhaustive examples on protections and opportunities for small and medium-sized enterprises (SMEs) from the Corporate Sustainability Due Diligence Directive (CSDDD) Trilogue compromise agreement
In the context of ongoing regulatory developments and the expected vote on the European Union Corporate Sustainability Due Diligence Directive, the UN Global Compact reiterates its support for mandatory human rights due diligence.
UN High Commissioner for Human Rights Volker Türk on Tuesday urged EU leaders to approve a ground-breaking agreement on business and human rights, amid reports that support for the measure may now be in question in the European Council.
This week, the Council of the European Union can be a game changer, by adopting the compromise text resulting from political trialogue negotiations last December on the Corporate Sustainability Due Diligence Directive (CSDDD). CIDSE and COMECE urge the EU Member States to support the EU Corporate Sustainability Due Diligence Directive.
European Union countries on Friday postponed a decision on a proposed law which would require large companies to check if their supply chains use forced labour or cause environmental damage after Germany indicated it would abstain.
The Corporate Sustainability Due Diligence Directive (CSDDD) has been taken off the agenda of Friday’s meeting of EU ambassadors, as it was not expected to reach a majority among EU countries.
18 doctoral researchers from the International Doctorate Programme on Business and Human Rights at Friedrich-Alexander-Universität Erlangen-Nürnberg in Germany urge all EU member state governments to vote in favor of the Corporate Sustainability Due Diligence Directive (CSDDD).
The crucial meeting on 9 February will determine whether the EU can secure a law that benefits companies, markets, affected communities, and the environment alike.
70 companies and networks, including Nokia, Novo Nordisk, Ørsted, Vattenfall and Bestseller, call on their governments to vote in favour of the initiative at the upcoming Council meeting.
The Free Democratic Party is blocking a major EU business policy initiative at the last minute. Germany’s abstention reflects the earlier reluctance of its coalition partners to push back harder against efforts by the liberals to kill the law.
Ahead of the EU Council’s vote on the European Corporate Sustainability Due Diligence Directive (CSDDD), over 300 business and human rights practitioners joined a call to support the CSDDD.
As the Corporate Sustainability Due Diligence Directive (CSDDD) nears a crucial juncture in its legislative and political journey, recent developments in Germany have intensified the debate surrounding this EU milestone in holding corporations accountable.
Ahead of a crucial vote on Friday on new landmark European Union business legislation that would help safeguard human rights, which the German government is now threatening to withdraw its earlier support for, Amnesty International calls for all member states to approve this legislation.
Gathered within the Business for a Better Tomorrow coalition, large, medium-sized, and small businesses, argue undermining the compromise would be a strategic mistake for the European economy and would create legal uncertainty.
The German Institute for Human Rights urges the German Government and all other EU member states to vote in favour of the EU Corporate Sustainability Due Diligence Directive (CSDDD) in the final vote on 9 February.
AIM, which represents manufacturers of branded consumer goods in Europe, urges EU member states to support Corporate Sustainability Due Diligence Directive compromise agreement.
As the vote on the European Corporate Sustainability Due Diligence Directive (CSDDD) approaches this Friday, UNI Global Union is calling on governments to support this legislation, which is key to embedding human rights across companies’ operations and value chains as well as across economies.
On February 6, 2024, the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI), Eurosif - the European Sustainable Investment Forum, the Interfaith Center on Corporate Responsibility (ICCR), and the Investor Alliance for Human Rights (IAHR) released a statement reiterating their support for the agreement reached between the Council and European Parliament on the Corporate Sustainability Due Diligence Directive (CSDDD).
According to the trade unionists Nasir Mansoor and Zehra Khan, even if there are some areas that need to be improved, the German Supply Chain Act is already having a positive impact and is protecting human rights on the ground - as are those companies that are willing to address human rights in their supply chains.
Statement by legal professionals from France, Germany, Italy, Spain, Poland, the Netherlands and Portugal who work together to develop European Model Clauses (EMC) in the framework of the future European Corporate Sustainability Due Diligence Directive (CSDDD)
Chancellor Scholz needs to rule on the matter and decide that his government supports the law, despite resistance from the FDP, writes Juliane Kippenberg from Human Rights Watch.
Mary Robinson, Chair of The Elders, and Phil Bloomer, Executive Director, BHRRC, reflect on the massive leap forward made by the EU last week, with its ground-breaking political deal to better tackle human rights abuses and environmental harms caused by business. Globally, this is the first attempt to enshrine the international standards set by the UN and the OECD in laws across a major economic bloc, and with legal liability and administrative penalties for companies that do not comply.
