EU Adopts Corporate Sustainability Due Diligence Directive

To reinforce corporate responsibility, the Council of the European Union has officially approved the EU Directive on corporate sustainability due diligence (CSDDD). This directive imposes obligations on EU and non-EU companies concerning compliance with human rights standards and environmental impacts.

Adoption of Legislation and Risk-Based Approach

The Council's approval signifies the adoption of CSDDD as legislation, marking a pivotal moment following its initial blockage in February. The directive, which garnered 374 votes in the European Parliament, adopts a risk-based approach to ensure corporate accountability.

Complementary Legislation and Advocacy Momentum

CSDDD complements existing legislative acts such as the deforestation regulation, conflict minerals regulation, and regulation prohibiting products made with forced labor. It gained momentum from advocacy by rights groups and trade unions, particularly in response to corporate human rights abuses.

Phased Application and Objective

Effective implementation entails phased application based on company size and turnover. The primary objective is to ensure companies and their subsidiaries adhere to responsible and sustainable corporate practices, both within and outside Europe, mitigating risks to human rights and the environment.

Enforcement Mechanisms and Applicability

Enforcement occurs through administrative supervision and civil liability mechanisms. The directive extends its applicability to large EU limited liability companies and partnerships and large non-EU companies.

Acclaim from Human Rights Organizations and Executive Statements

approval has received acclaim from prominent human rights organizations, including Human Rights Watch (HRW) and Amnesty International. Tirana Hassan, executive director at HRW, hailed the directive as a landmark shift towards mandatory corporate responsibility. Amnesty International's Policy Advisor on Business and Human Rights, Hannah Storey, described it as a defining moment for human rights and corporate accountability.

Effective Date

The CSDDD will enter into force 20 days after its publication in the Official Journal of the European Union.