29 Feb 2024

CSDDD Challenges: Navigating Setbacks in EU Legislation

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) has faced escalating challenges since its final draft release on January 20.  Despite weeks of uncertainty and concerns over the proposal’s fate, supporters were buoyed by the European Council’s unexpected decision to schedule a vote for February 28.  However, optimism quickly waned as the vote failed to garner sufficient support.  This cast doubt on the CSDDD’s revival before the March 15 deadline for approval by the European Parliament.

The Directive

The CSDDD, also called the CS3D, aims to establish a corporate due diligence standard on sustainability issues within the EU.  The directive focuses on environmental concerns, climate change, and human rights.  It imposes obligations not only on companies but also on their subsidiaries and supply chains.  Consequently, it potentially holds EU-based and non-EU companies accountable for the actions of their suppliers.

The Vote

Initial backing for the CSDDD’s final draft dissipated following Germany’s indication of abstention.  This prompted a cascade of withdrawals from other member states, including Italy.  Reports suggest that Italy’s opposition may have been part of a broader deal with Germany.  The agreement may involve reciprocal support withdrawals for other EU legislation, such as the EU Packaging and Packaging Waste Directive.

Despite efforts to salvage the directive, including a last-minute move by France to weaken its impact on businesses, the CSDDD’s prospects remain bleak.  With critical deadlines approaching – March 15 for approval by the European Parliament and an earlier deadline of March 7 for approval by the legal affairs committee – advocates are facing mounting challenges.

The Outcome

The looming elections in June further complicate the situation, as the composition of the European Parliament may shift, potentially altering support for sustainability directives like the CSDDD and the Corporate Sustainability Reporting Directive (CSRD).  However, given the current trajectory, the CSDDD may not secure the necessary support for adoption.

Moving forward, stakeholders must navigate procedural obstacles and explore avenues for revising and garnering broader support for the directive.  The failure to advance the CSDDD underscores the intricacies of EU legislative processes.  It also speaks of the importance of balancing diverse interests in shaping sustainability policy.


Author: Milica Novaković