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REACTION A game changer with loopholes: EU finally adopts landmark Corporate Due Diligence law
News Due diligence
May 24th, 2024
by Sabela Gonzalez Garcia

Brussels, May 24, 2024 – In a move to prevent corporate abuses like the 2022 REPSOL oil spill caused in Peru, EU ministers today voted in favour and gave the absolute final sign-off to the Corporate Sustainability Due Diligence Directive (CSDDD). This marks a significant step towards holding companies accountable for human rights and environmental harms connected to corporate malpractice. The law is expected to impact stakeholders far into global value chains – including rightsholders such as workers, farmers; and suppliers who have been at the short end of the stick when powerful corporations abuse their power with impunity. 

Despite progress, the law has serious weaknesses. Its scope within the value chain and the protected rights aren’t as broad as they should be. To truly prevent harm, EU countries must strengthen these aspects when transposing the directive into national laws. They must ensure the tools they create are practical for companies and enforcement authorities, and ultimately effective in protecting people and the planet.

“Despite its flaws, the CSDDD delivers a clear message: Europe will no longer tolerate profit-making at the expense of people and the planet. This is a win for the countless workers and communities who have been fighting for corporate accountability for years. But let’s not sugarcoat this – the true test will be how well EU countries enforce these rules and close as many loopholes as possible.”
- Nele Meyer, ECCJ Director

Why the CSDDD matters: Europe embeds its commitment to protecting people and the planet

Just over two years ago, a massive oil spill off the coast of Peru by Spanish energy giant Repsol sent shockwaves through the environmental community. The estimated 12,000-barrel disaster contaminated a vast area, roughly the size of Paris. This environmental catastrophe devastated marine life and local livelihoods – another proof of the lasting damage that can be caused by corporate negligence. Miguel Lévano of Oxfam Perú: “A strong law is crucial to give victims the right to seek justice and hold companies accountable for the damage they cause, like the potential reparations for those affected by the Repsol spill.”  

 

The newly adopted EU Corporate Sustainability Due Diligence Directive represents a potential turning point in requiring companies to prevent such tragedies, not just within Europe, but also for their operations in the Global South. Danilo Chammas, a human rights lawyer representing victims of the Brumadinho dam disaster in Brazil, emphasises the significance: “Civil liability and sanctions will finally hold companies accountable in Europe for failing to meet their due diligence obligations. This is a major win for victims who have long suffered the consequences of corporate impunity.”

The CSDDD is just the beginning: effective implementation is key

The EU has a responsibility to lead by example. The fight for a strong, binding UN Treaty on Business and Human Rights continues, and the CSDDD is a crucial stepping stone. The voices from the Global South are clear: Kalpona Akter of the Bangladesh Center for Workers’ Solidarity emphasises that “the betterment or security of the rights of people and the environment should never be second to the profits of business enterprises.”  

The CSDDD’s success hinges on more than just words on paper. While it’s a milestone, EU capitals can go further than what is in the directive. To achieve meaningful impact, Member States must ensure strong national legislation with teeth – tick-box compliance won’t do. They must allocate adequate resources for enforcement and secure effective implementation that holds corporations accountable. This is the true test of the EU’s commitment to corporate justice.

What the ECCJ want from EU Member States: 

  • Close loopholes: Expand the reach of the directive to cover the entire value chain and include all sectors and more companies.
  • Strengthen access to justice: Reverse the burden of proof to make it easier for victims to hold corporations accountable.
  • Ensure robust enforcement: Allocate adequate resources to investigate corporate misconduct and impose meaningful sanctions. 

 

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Overview of the Corporate Sustainability Due Diligence Directive; Advancing Corporate Responsibility
Overview of the Corporate Sustainability Due Diligence Directive; Advancing Corporate Responsibility
May 24, 2024
CSDDD