On 24 May, EU member states formally confirmed the Corporate Sustainability Due Diligence Directive (CSDDD) in Council – the absolute final sign-off of this landmark law, after a 4-year legislative process at EU level with many twists and turns, and almost a decade of advocacy. The directive will now be published in the Official Journal of the EU, and member states have two years to transpose into national legislation.

Phil Bloomer, Executive Director of Business & Human Rights Resource Centre (BHRRC), said: “Today’s final confirmation of the CSDDD is landmark progress for workers’ and communities’ rights worldwide, and the protection of responsible business against abusive competitors. The directive is the most important legal innovation for human rights in business of this decade.”

Johannes Blankenbach, BHRRC’s Senior EU/Western Europe Researcher & Representative, added: “Despite previous concessions, the new directive is groundbreaking as it makes due diligence mandatory, EU-wide, for companies within scope. Transposition needs to ensure its potential in tangibly improving the situation for rightsholders, as well as promoting more equitable value chains and a level playing field of effective practice, is fully utilised.”

In addition to trade unions, civil society organisations, rightsholders and progressive policy makers in Parliaments, governments and the EU Commission, the CSDDD has had unprecedented support from business, most recently in a joint statement endorsed by more than 100 large companies, SMEs and networks calling on EU legislators to fully adopt the law. However, there has also been enormous political and lobby pressure to water it down – disappointedly representing an outdated ‘lowest common dominator’ of business practice. Yet this has resulted in a final law with several omissions.

Member states now have an opportunity to embrace the historic moment and ensure ambitious transposition of the EU text into national legislation, narrowing and closing normative gaps wherever possible. These include the severely reduced scope of companies covered; and limited recognition of a company’s downstream business partners’ impacts and impacts of financial activities. Transposition and implementation in the spirit of the UN Guiding Principles (UNGPs) and OECD Guidelines, along with adequately resourced enforcement, will also strengthen the directive’s most promising features, to name a few:

• The CSDDD is – so far – the international due diligence law most aligned with the international UN and OECD standards on human rights in business. A risk-based approach means companies address risks across the full supply chain, focusing first on the most salient for people and planet. Effective transposition, implementation and enforcement need to uphold and build on this and ensure possible (gendered and intersectional) impacts on human rights defenders’ (HRDs) and Indigenous Peoples’ rights, as well as urgent enabling rights such as freedom of association and to collectively bargain, receive regular attention in all due diligence.
• The CSDDD’s civil liability mechanism finally gives more weight to access to justice and remedy – a core tenet of the UNGPs and international human rights system. Member states should seek to further reduce barriers to affected individuals’ and groups’ access to judicial remedy.
• Mandatory stakeholder engagement – detailed in a stand-alone CSDDD article – ­gives rightsholders a say on issues and measures that affect them, greatly improving due diligence. National transpositions should require (even more) comprehensive engagement, further curb superficial approaches, and strengthen explicit pointers to HRDs and Indigenous Peoples as rightsholders in stakeholder engagement and overall due diligence. The final text (particularly in the recitals) already includes language on both groups, as well as on the UN Declaration on HRDs and UN Declaration on the Rights of Indigenous Peoples, and clarifies their rights or interests might be affected/impacted by corporate activity.
• Due diligence is more than ‘policing’ suppliers through social audits – the CSDDD provides for a broader catalogue of measures, including support to SMEs and adjustments to brands’ own harmful purchasing practices. It is key that transposition, implementation and enforcement uphold and strengthen the focus on effectiveness of measures and avoid past traps of tick-box compliance and failed CSR models.
• Companies including those in finance will be obliged to develop and implement transition plans for climate change mitigation, which is a promising starting point and adds to the directive’s relevance for a just transition, recognising enforcement of plans will be key.

We will keep track of NGO and others’ reactions and analysis via our website story as they come in.