impACT International welcomes news of CSDDD passing EU Parliament

impACT International welcomes news of CSDDD passing EU Parliament

impACT International welcomes news that the European Parliament has provided approval for the Corporate Sustainability Due Diligence Directive (CSDDD), a critical step in integrating mandatory due diligence for corporations active within the EU market with the next stage being final formal approval. 


The initial failure of the EU Council to pass the CSDDD was received as a huge blow. With many civil society organisations fearing no changes to the myriad human rights abuses committed by EU-based corporations globally, as well as, a missed opportunity to bring corporate sustainability and emissions in line with the Union’s obligations to the Paris Climate Agreement. The CSDDD, as reported by impACT International in March, would have set clear regulatory parameters for corporations based in the EU. These were: 


  • Integrate due diligence on impacts on communities and the environment into corporate policies and risk management systems 
  • Clear descriptions of their approach and code of conduct 
  • Obligations to adopt climate transition plans ensuring that their business models and strategy are aligned with the Paris Agreement 
  • Integration of a complaints mechanism with clear pathways 
  • Supervision and sanctions, member states must establish supervisory authorities to monitor compliance within obligations, with up to 5% of global annual revenue penalties 
  • Clear ‘naming and shaming’ punishments 


Despite overwhelming support, due to the French delegations effectively “derail[ing] negotiations by proposing a tenfold increase in the company [employment] threshold” and German abstention, the CSDDD was not passed. A major setback, the recently approved CSDDD is far less ambitious from it’s predecessor.  With the French delegations proposal to increase the threshold of businesses legible for the CSDDD, this has translated into a new directive which will cover a far smaller portion of EU companies, “will leave out crucial parts of the value chain and contains significant gaps with regards to workers’ rights and the rights of victims”. 


Though, of course, a critical moment for the regulation of corporations abusing both working people and the global environment, the watered-down CSDDD will be far less effective at reigning in corporate power. 


There are still some victories within the newly agreed CSDDD. Firstly, application of a risk-based approach is a critical step to targeting the most flagrant abusers of both human and environmental rights. Additionally, the new directive places stakeholder engagement as a critical aspect of the supply chain, providing those vitally involved with the ability to report on abuses and practices. 


impACT International will continue to follow the CSDDD as it enters it’s final steps in the approval process. 


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