Analysis of the draft Corporate Sustainability Due Diligence Directive, on the basis of the OECD Guidelines
In this report, the NCP presents a comparative analysis of the Commission proposal for the Corporate Sustainability Due Diligence Directive (CSDDD, 2022) and of the Council position on the CSDDD (2022) [...] using the text of the OECD Guidelines for Multinational Enterprises (MNEs) (2011) and of the OECD Due Diligence Guidance for Responsible Business Conduct (2018)...
The NCP compared the CSDDD regulatory framework with the OECD regulatory framework on a number of key points under the latter, in three categories: the due diligence process, the scope of due diligence and the essential characteristics of due diligence. The comparison is factual, non-exhaustive, and the focus is on the standards for corporate behaviour contained in the two frameworks. On this basis, the NCP identified notable points of divergence between the CSDDD regulatory framework and the OECD framework in 14 key areas. These pertain to each of the six steps of the due diligence process, different aspects of the scope of due diligence (companies and sectors, themes, reach within the supply chain) and various essential characteristics (the expectation that due diligence should be preventative, risk-based and dynamic, that it requires appropriate measures and stakeholder engagement, and that it does not shift responsibilities)...
The overarching point of attention is the concern that limitations in the CSDDD regulatory framework in comparison with the OECD framework will result in a dilution of RBC principles and standards of conduct from the OECD Guidelines and/or in a lack of clarity about what is expected from companies in terms of RBC and due diligence. There is a risk that companies that fall within the scope of the legislation will feel bound only by the legislation itself and no longer by aspects of the OECD Guidelines that are not included in the legislation. In addition, it is certainly not inconceivable that companies that fall outside the scope of the CSDDD will conclude that they are not or expected to carry out due diligence, or only to a limited extent.
Such a situation would compromise the integrity of the existing framework of due diligence standards and their further development and interpretation in the form of guidance by the OECD and rulings by NCPs in specific instances. Failure to carry out due diligence adequately (or even at all) may result in or perpetuate adverse impacts on people, the environment and society as a consequence of the operations of a company, its subsidiaries and/or its supply chain partners...
The NCP notes that some of these specific points of attention are addressed in the European Parliament position... The NCP makes no judgment on whether these points are fully addressed; it merely considers whether the position of the European Parliament on the point in question is more in line with (i.e. diverges less from) the OECD regulatory framework than the Commission proposal and/or the Council position. The NCP also notes that there are still limitations in the European Parliament position...