The Corporate Sustainability Due Diligence Directive (CSDDD) Everything, Everywhere, All at Once?

Abstract

The CSDDD is a major step to integrate supply chain sustainability standards in EU Law, moving beyond voluntary commitments and disclosure-based approaches. The CSDDD’s (unusually) frayed legislative process has placed the focus on some of the CSDDD limitations (according to human rights advocates) or excesses (according to members of industry). This, however, largely distracts from the CSDDD’s distinct feature: its ambition; and from its main challenge: turning a source of costs and risks into a value proposition. Although the OECD Guidelines, a voluntary standard that inspires the CSDDD, state that they do not expect companies “to be perfect in everything, everywhere, all at once”, the CSDDD, by turning voluntary soft law into mandatory law obligations risks doing exactly that. The CSDDD can only become a transformative text, instead of a box-ticking compliance framework under certain underlying conditions. First, the expertise of competent authorities that enforce the Directive; second, the transformation of adversarial dynamics between firms and stakeholders into collaborative ones. Third, the existence of positive incentives for firms to use supply chain control as a source of competitive advantage. This paper places the focus on these aspects, as a precondition for the CSDDD’s success.

Keywords: Supply chains, Value chains, Due diligence, Corporate sustainability, Transition plans, Climate litigation