|Author (Corporate)||European Commission: DG Justice|
|Series Details||COM (2022) 71|
|Content Type||Blog & Commentary, News, Policy-making|
Legislative initiative tabled by the European Commission on 23 February 2022, addressing Corporate Sustainability Due Diligence (CSDD) and introducing amendments to Directive (EU) 2019/1937. This is a text with EEA relevance.
The behaviour of companies across all sectors of the economy is key to succeed in the European Union's transition to a climate-neutral and green economy. This requires implementing comprehensive mitigation processes for adverse human rights and environmental impacts in their value chains, integrating sustainability into corporate governance and management systems, and framing business decisions in terms of human rights, climate and environmental impact, as well as in terms of the company’s resilience in the longer term.
However, EU companies operate in complex surroundings and, especially large ones, rely on global value chains. They may therefore encounter difficulties to identify and mitigate risks in their value chains linked to respect of human rights or environmental impacts. Identifying these adverse impacts in value chains is seen as becoming easier if more companies exercise due diligence. Some EU companies have started using value chain due diligence as a tool to identify risks in their value chain and build resilience to sudden changes in the value chains, via the existing international voluntary standards on responsible business conduct.
Voluntary action did not appear to have resulted in large scale improvement across sectors. At the same time, emerging legal frameworks on corporate due diligence in some Member States reflected an increasing desire to support companies in performing due diligence, but also raised concerns over potential fragmentation and legal certainty, as well as the level playing field for companies in the EU's Single Market.
The proposed Directive aims to set out a horizontal framework aimed at fostering the contribution of businesses operating in the Single Market to the respect of the human rights and environment in their own operations and through their value chains. This draft law followed calls by the European Parliament (March 2021) and the Council of the European Union (December 2020) concerning action on sustainable corporate governance. The proposal also took into account a public consultation and two external studies. It was published alongside a Communication on Decent Work Worldwide.
|Subject Categories||Business and Industry, Environment, Values and Beliefs|
|Subject Tags||Fundamental | Human Rights, Sustainable Development|
|International Organisations||European Union [EU]|