After enduring weeks of negotiations and revisions, the European Council has finally approved the Corporate Sustainability Due Diligence Directive (CSDDD). The directive, often referred to as CS3D, aims to establish stringent sustainability standards for businesses within the EU, focusing particularly on environmental, climate change, and human rights issues within their operations and supply chains.
This new legal framework imposes liability on EU-based companies, as well as non-EU companies that conduct significant business within the EU, for environmental and human rights violations committed not only by themselves but also by their subsidiaries and suppliers. The directive marks a significant step in holding corporations accountable for their supply chains, pushing companies to undertake thorough due diligence processes.
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However, the version of the CSDDD that passed was significantly toned down from its original draft, a development that has disappointed many sustainability advocates. Initially, the directive seemed set for swift approval, but the process was stalled when Germany announced its decision to abstain from voting. This decision influenced other countries like France and Italy to follow suit, leading to a lack of majority support in the European Council.
This sparked 45 days of intense behind-the-scenes negotiations filled with political maneuvering and adjustments to the directive’s provisions. Throughout this period, drafts were circulated and frequently amended in an effort to garner sufficient support, with each version reducing the scope of the directive further. Despite the repeated attempts to place the CSDDD on the council’s agenda, it was continually postponed due to the evident lack of consensus.
The watered-down directive, which has now been pushed through the European Council, will next face the European Parliament for final approval. This phase is crucial as the directive seeks to establish a new normative framework that could redefine corporate accountability in Europe, emphasizing sustainable practices and respect for human rights across global supply chains. The approval process in the European Parliament will be closely watched by businesses and sustainability advocates alike, as it will determine the practical impact of the CSDDD on corporate operations and their broader implications for environmental and social governance in Europe.
