'COREPER I meeting of 15 November - Ensuring an effective Corporate Sustainability Due Diligence Directive (CSDDD)'

Honourable Ambassadors,

On 15 November you will discuss the Corporate Sustainability Due Diligence Directive (CSDDD) to update the Council’s negotiation mandate for the next political trialogue. We would like to draw your attention to five issues that are key to aligning the legislation with international standards and ensuring real-world improvements for people and the planet.

1. Climate transition plans

Climate transition plans should be embedded within the general due diligence duty. The CSDDD must clarify the key components of the climate transition plan... Companies must be required to not only develop, but also to effectively implement their climate transition plans. These obligations should be enforceable in the same way as other due diligence obligations...

2. Civil liability & access to justice

Restrictions on civil liability to harm that has been ‘caused to a natural or legal person’ and only for cases where there is an aim ‘to protect the natural or legal person’ must be removed. These risk excluding the rights that are collectively enjoyed, like the rights of workers, trade unions and Indigenous Peoples... To ensure that victim-claimants are not faced with insurmountable procedural barriers, all access to justice measures listed in the European Parliament’s report must be incorporated, including the possibility of reversal of the burden of proof at the national level...

3. Inclusion of the financial sector

We urge you to include meaningful due diligence obligations that would apply to key financial sector activities within the CSDDD, including lending, investing and insurance... Financial institutions are crucial to shaping sustainable economic systems, exerting leverage over a broad range of other economic sectors and business activities, and have a key role in upholding the protection of human rights, the environment and climate globally. At the same time, EU banks, insurers, investors and asset managers are involved in severe adverse impacts... The CSDDD provides an unprecedented opportunity to... fill the regulatory gap in the EU’s Action Plan on Financing Sustainable Growth, with many investors having voiced their support for an ambitious legislation.

4. Value chain

The value chain must cover both upstream and downstream activities and business partners or entities, including those related to composition, design, sale, waste management, and impacts arising from reasonably foreseeable use or unintended use. This would allow for alignment with international standards, which explicitly require due diligence across the entire value chain. Including ‘use’ would ensure that companies address serious impacts resulting from the foreseeable use and misuse of their products. The CSDDD value chain definition should also include (direct and indirect) business partners as well as non-legal entities...

5. Normative scope

A clear and sufficiently comprehensive understanding of human rights and the environment potentially impacted is required for a risk-based approach due diligence to work across sectors. Limitations through the definition of adverse human rights impact... must be removed... All additional instruments included in the European Parliament’s position, including the UN Declaration on the Rights of Indigenous Peoples and the body of international humanitarian law, must be added. In particular, the rights of Indigenous Peoples and human rights defenders must be added and explicitly protected...

Defining environmental impacts based on environmental categories, as proposed by the European Parliament, would promote alignment with EU legislation (CSRD, and EU Taxonomy and Batteries Regulations) and the OECD Guidelines... Climate impacts should be explicitly included in the Annexes to the CSDDD...