'Effective Environmental and Climate Protection in the CSDDD: Challenges and Priorities'

Companies have played a major role in creating the environmental challenges we face today, and we are at a more critical point than ever in terms of the need to address these harms. This briefing addresses two main challenges for the Trilogues negotiations in order to allow for effective environmental and climate protection in the Corporate Sustainability Due Diligence Directive (CSDDD): 1. Listing environmental conventions does not provide adequate protection, and 2. tackling climate change is a critical part of environmental due diligence.

1) Challenge: Listing environmental conventions does not provide adequate protection.

Due to the fragmentation of international environmental law, it is inappropriate to define adverse environmental impacts only in relation to environmental agreements. For instance, there are no treaties addressing plastic pollution or soil degradation, and several existing frameworks have failed to avert environmental degradation. Moreover, even where frameworks exist, the included provisions represent only a small subset of the conventions...

Therefore, environmental impacts should first be defined comprehensively, such as the European Parliament does by introducing environmental impact categories reflecting a broader range of environmental impacts (similar to the approach in the CSRD, EU Taxonomy, and Batteries Regulation). Using impact categories would enable an effective risk-based approach and promote alignment across EU legislation. It would also better reflect the complex interconnections between different environmental crises...

2) Challenge: Tackling climate change is a critical part of environmental due diligence.

Achieving the climate objectives of the Paris Agreement and the European Green Deal to keep global warming to 1.5ºC requires action towards decarbonisation by all actors across sectors... Fossil fuel companies and financial institutions based and operating in the EU are still investing in carbon-intensive projects that would result in enormous additional amounts of CO₂ emissions, exceeding current reduction plans for the EU and its Member States. A reduction obligation would therefore also greatly help the EU and its Member States to achieve their climate obligations. Companies’ actions complement public resources, and are indispensable for the achievement of public policy objectives. To this end, the effective implementation of climate transition plans is an essential tool to mandate action on climate change.

CSDDD must define climate due diligence within the overall approach to environmental due diligence.

The climate transition plans envisaged in Article 15 of the CSDDD must be embedded within the general due diligence duty. While climate transition plans refer to a forward-looking strategic framework describing a company’s action path towards a low-carbon and climateresilient future (against defined time-bound targets), climate due diligence focuses on assessing and preventing potential and actual impacts, including climate ones...

CSDDD has to spell out key requirements and the obligation to implement transition plans.

Transition plans have to ensure that the business model and strategy of the company are aligned with the objectives of the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement and the EU Climate Law...

Specifying the content of transition plans will prevent greenwashing, contribute to legal certainty, improve comparability and facilitate a level-playing field in terms of implementation and enforcement.