"The business risks of re - opening Level 1 of the EU CSDDD," February 2025

This briefing note is for those working in companies operating in the EU who will be subject to the EU Corporate Sustainability Due Diligence Directive (CSDDD).

It provides an overview of why re-opening Level 1 of the EU CSDDD comes with a number of business risks.

It delves into the risks of (1) fragmented, competing and conflicting legal expectations, (2) conflicting investor expectations, (3) undermining a level playing field and enabling unfair competition, (4) reopening adversarial debates with companies’ stakeholders, and (5) years of legal uncertainty that come with reopening Level 1 of the EU CSDDD.

To counter these business risks, adjustments that seek to meet the desire for simplification can remain at a technical level rather than involving a rewrite of the legal text itself. The ongoing simplification process that is happening now offers a crucial opportunity to shape the directive in a way that enhances clarity and workability.

Looking ahead, businesses have two key opportunities: they can (1) if they act now, play a meaningful role in protecting Level 1 of the EU CSDDD from lengthy political negotiations that are risky for business, and (2) help ensure that clarifications and simplifications happen through Level 2 of the EU CSDDD.

Legal certainty, predictability and fair competition for companies operating in the EU in the coming years depend on this happening.