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12 Jun 2023

Global Justice Clinic at Erfurt University in cooperation with the German Institute for Human Rights and Luxembourg University

Strengthening Stakeholder Engagement in the EU Corporate Sustainability Due Diligence Directive - Policy Briefing Paper

The proposal for a directive on corporate sustainability due diligence, adopted by the European Commission on 23 February 2022, is an important step forward for human rights protection in global value chains. However, this proposal neglects a key element for effective due diligence: engagement with rights-holders, particularly those in the Global South. The provisions on stakeholder engagement are fragmented, vague, and underdeveloped. Additionally, these provisions do not adequately reflect the current state of international human rights law and international guidelines. The Commission’s proposal falls short of creating the regulatory environment necessary to enable effective implementation of sustainability due diligence.

Therefore, 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.

Key recommendations:

  1. Adopt a rights-holder centered approach throughout the CSDDD and emphasize the agency of rights-holders...
  2. Revise the definition of stakeholders in Art. 3 and identify rights-holders as the central category of stakeholders for HREDD, distinguish between potentially or actually affected rights-holders, and other types of stakeholders that legitimately represent rights-holders...
  3. Include a new stand-alone provision on stakeholder engagement...
  4. Remove vague language limiting stakeholder engagement (“where relevant”) from Articles 6(4) and 8(3) and make engagement mandatory in all phases of the due diligence process...