BEERG Newsletter - Due Diligence: 198 amendments on CSDDD submitted

The German MEP, Axel Voss (CDU), on behalf of the centre-right European Peoples Party (EPP), has introduced 198 amendments to the Commission’s text. Speaking to BEERG Voss said:

The Corporate Sustainability Due Diligence Directive (CSDDD) was meant to be a common European approach for large companies to take responsibility in their supply chains for human rights and environmental standards. Grounded in international guidelines that have long been developed in the OECD Framework or the UNGPs, Due Diligence was never meant as an obligation of result for companies to fix every risk they might not even be able to identify, but as an obligation of means for companies to try their best to mitigate risks and take responsibility for harms that they have actually caused or contributed to.

The Commission proposal, published in February 2022, however did not reflect that. Proposing a broad scope and covering the full value chain, it did not reflect a risk-based approach, meaning not leaving any room for companies to focus on the parts of their value chain where risks might occur, and even calling on companies to disengage from their suppliers, should they not be able to immediately mitigate a risk they identified. While this might be wishful thinking, it is not practical, neither for companies nor for affecting any actual change, and it certainly does not reflect the international framework.

 So, the 198 amendments we have tabled today in the Legal Affairs committee would move towards an actual risk-based approach in the CSDDD.

Meanwhile, ministers from EU Member States have backed a carve-out for banks and investment funds from potential legislation designed to oblige companies to report on environmental and human rights abuses in their supply chains. The exemption, pushed by France, has prompted criticism from campaigners who say the move will allow large banks and fund managers to continue financing fossil fuel or mining projects without properly scrutinising the environmental damage or social issues they might cause.

Anna Cavazzini, a German Green MEP, described the push to exclude financial institutions as “scandalous and incomprehensible”, adding: “The financial sector has an enormous steering effect and the EU should no longer tolerate investments in human rights violations and environmental destruction.”

Under the EU’s proposed rules, known as the corporate sustainability due diligence directive, companies with more than 500 employees or €150mn in global turnover would be required to identify and prevent or mitigate activities such as child labour, worker exploitation or damage to natural ecosystems in their supply chains. Victims of any damage would be empowered to take legal action if abuses that had not been reported by businesses were uncovered.