What are people saying about the draft EU Corporate Sustainability Directive?

Posted by
05.04.2022

What are people saying about the draft EU Corporate Sustainability Directive?

Posted by

Many different stakeholder groups have provided commentaries in response to the draft EU Corporate Sustainability Directive, published in February. Here we compile some of the contributions and will expand this post over the coming months to provide a holistic overview of commentary on the emerging mHRDD landscape – both at the European level and in the individual EU member states.

Germany adopted the Supply Chain Act (‘Lieferkettensorgfaltspflichtengesetz’) last year; and France has had the Devoir de Vigilance legislation in place for a few years. Spain has also launched a legislative initiative aiming at enhanced accountability for businesses. More countries will inevitably start the process of legislative development in the coming months and years.

The majority of the commentators, regardless of their positioning on the interest group map, acknowledge the ‘milestone character’ of the Proposal Directive. But while commentary from law firms essentially focuses on the substantive elements of the law and point businesses affected towards necessary steps to be taken in terms of compliance, NGOs and other civil society actors concentrate on what they characterise as weaknesses in the proposed legislation. The main points identified include:

the scope of coverage (including the restriction of the coverage to larger companies)
the (limited) definition of ‘high risk sectors’
limitations on the scope of due diligence measures
the nature of director duties
the absence of provisions mandating stakeholder engagement in the proposed Directive

In this context, the European Coalition for Corporate Justice (ECCJ) also points out the alleged failure of the Commission to include provisions on the facilitation of access to justice for victims of human rights violations by companies.

An important academic contribution, which is certainly worth consulting by anyone seriously interested in the development of this proposal, was made by Robert McCorquodale and Stuart Neely on the question of directors’ duties. The authors were closely involved in studies for the Commission in the run up to the proposal and pick up on the link between directors’ duties and human rights due diligence in a European legislative context concluding that directors’ duties can serve as an effective leverage in Member States’ individual jurisdictions to compensate for the lack of an appropriate corporate governance element in the Directive.

Both Shift and The Danish Institute of Human Rights published their comprehensive analyses of the proposed Directive in March 2022 including recommendations on how to strengthen certain parts of it. Both are worth consulting as a first step. A similarly comprehensive piece interpreting and evaluating the Directive’s content has been published on Verfassungsblog, a German law blog on constitutional matters.

The Business and Human Rights Resource Center also provides a chronological list of written inputs on the new Proposal Directive which can be found here.

Even this short survey of commentaries shows how much debate has been created and how great is the need for clarification on certain key areas. A list of resources on the proposed Directive is below. The list is non-exhaustive and will be continuously updated.