Search

On 23 February 2022, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence (hereinafter: CSDD). It aims to foster sustainable and responsible corporate behavior throughout global value chains. Companies will be required to identify and, where necessary, prevent, end, or mitigate adverse impacts of their activities on human rights (e.g., child labor, exploitation of workers) and on the environment (e.g. pollution and biodiversity loss). The CSDD would apply both to the EU and non-EU companies reaching certain thresholds in terms of the number of employees and amount of net turnover, with minor exemptions when the non-EU companies are concerned. Lower thresholds apply if the EU companies are doing business in the high- risk sectors, while the higher apply if the companies are operating in the non-high risk sector. To comply with new due diligence rules, companies would be required to check whether their operations are aligned with human rights and environmental law conventions listed in the Annex of the CSDD, as well as the operation of its subsidiaries and all suppliers upstream and downstream in the value chain – with whom they have “established business relationship”. Given the fact that the new set of duties is comprehensive and their non-compliance triggers the company’s liability, the paper aims to compare these boundaries of the personal scope of the CSDD with criteria prescribed in similar national laws of the member states as well as to question defensive tactics of the target companies.