EU nations struggle to agree on CSDDD

4 mins read

Numerous European Union member states remain embroiled in deliberations over critical facets of the EU’s forthcoming legislation designed to hold corporations accountable for human rights and environmental transgressions within their extensive value chains. This protracted decision-making process has cast a shadow over the ongoing negotiations surrounding this crucial legal framework.

At present, European Union nations, in conjunction with the European Parliament, are engaged in intense discussions concerning the proposed Corporate Sustainability Due Diligence Directive (CSDDD). This directive, if ratified, would mandate that substantial EU enterprises, as well as those operating within the Union’s boundaries, shoulder the responsibility of identifying, forestalling, and mitigating any adverse repercussions stemming from their operational activities on the environment and human rights.

However, the course of these negotiations has encountered notable delays, with the third round of discussions conducted on September 7 primarily focusing on technical intricacies, as opposed to the more contentious elements of the directive, such as its overall scope.

An EU diplomat elucidated, “We’re advancing at the technical level,” whilst emphasising the positive rapport between EU negotiators and their counterparts in the European Parliament.

The pivotal juncture in these negotiations can be traced back to June when the European Parliament adopted a stance markedly more comprehensive than the approach endorsed by the Council in December of the preceding year. Consequently, several EU member states are yet to crystallise their positions, as they await the Parliament’s comprehensive report.

Germany, a pivotal player in these deliberations, still grapples with forming a definitive stance on the matter, with a spokesperson for the German Labour Ministry, overseeing the negotiations, stating that the “process of opinion-forming in the federal government continues.”

Luxembourg and the Netherlands, meanwhile, have maintained the same stance articulated in the common approach from December. However, this stance doesn’t afford the Spanish presidency a practical mandate to lead negotiations on the contentious aspects.

A significant divide exists concerning the inclusion of financial services within mandatory due diligence regulations, with EU lawmakers advocating for their incorporation, while member states provisionally concurred last year that the decision should rest with individual countries. France vehemently opposes such inclusion, as do several other nations.

Furthermore, the definition of “value chain” remains a contentious issue, with the European Parliament seeking to encompass certain downstream elements, such as product sales and transportation, within the purview of the directive. A narrower definition, limited solely to the supply chain, would also exempt financial services, whose adverse impacts predominantly stem from downstream activities.

Several member states, including Czechia and Lithuania, call for a more precise definition to ensure legal clarity, while Poland and Slovakia advocate narrowing the directive’s scope solely to the supply chain, expressing concerns that expanding it to encompass activities such as product development and delivery could lead to confusion.

Another shared apprehension among several member states, including Poland, Slovakia, Sweden, and Germany, revolves around the administrative burden this directive would impose on companies, particularly if downstream activities were to fall under its purview.

The impending negotiation round in November promises to bring more substantial decisions, even as discussions continue on a technical level in the intervening weeks. The intricacies and implications of the CSDDD continue to be scrutinised by EU member states and stakeholders, shaping the future landscape of corporate accountability in the realms of human rights and environmental responsibility.