The EU's Corporate Sustainability Due Diligence Directive: From Disclosure to Prevention of Adverse Sustainability Impacts in Supply Chains

Abstract

This article discusses the forthcoming EU supply chain legislation, by virtue of the Corporate Sustainability Due Diligence Directive (CSDDD) that was recently adopted by the Council of the EU and European Parliament and will soon be published in the Official Journal.

The CSDDD aims to reduce negative sustainability impacts in global supply chains with regard to a list of human rights and environmental standards specified in its Annex I.

We find that the CSDDD is a legal transplant combining the principles laid down in the OECD Guidelines for Multinational Enterprises on Responsible Business and those of the UN Guiding Principles on Business and Human Rights, along with elements of French supply chain legislation from 2017 (which relies on a private enforcement model) and the German supply chain law from 2021 (which is based on a public enforcement model). Like all legal transplants, the resulting legal text generally prompts questions about consistency and specifically raises doubts as to whether combining all of the components of a private and a public enforcement model is adequate to counter violations of human rights and environmental standards in global supply chains effectively.

The article is structured as follows: Following the introduction in Part A; Part B places the CSDDD in the context of existing approaches to sustainability-oriented law and regulation; Part C discusses the CSDDD’s scope; Part D covers the due diligence duties of in-scope companies under the CSDDD; Part E deals with the requirement of in-scope companies to disclose a transition plan for climate change mitigation; Part F analyzes the CSDDD’s enforcement and liability provisions; and Part G concludes.