Applying CSDDD in Corporate Groups

Abstract

The Corporate Sustainability Due Diligence Directive applies to certain corporate groups and furthermore require the companies that are within the scope of the Directive to conduct due diligence throughout the group. Therefore, the Directive is likely to affect not just the operation of groups but also potentially the structure of groups. The operation of groups may be affected by the fact that parent companies have a duty to conduct due diligence (and thereby oversee) the subsidiaries, but the parent company also has a duty to interfere in the subsidiary to prevent, mitigate or end adverse impacts in the subsidiary. Parent companies must also extend their code of conduct to subsidiaries. The operation of groups may further be affected by transfer of obligations under the Directive between group companies, as well as duties to share information and resources. All these rules are will probably affect the operation of groups subject to the Directive and is likely to have an implication on the duties of the companies and their directors. Finally, the way the competent Member State is defined in the Directive may make it attractive for the group to consider changing its structure to be allowed to comply with a more attractive national implementation of the Directive.

JEL Classification: K22