A Comparative Analysis between the Corporate Sustainability Due Diligence Directive and the French and German Legislation
This blog post offers an initial comparative glimpse of the most important changes that the Corporate Sustainability Due Diligence Directive (CSDDD) will bring for the respective mandatory human rights and environmental (HREDD) legislation in Germany and France. While both the French Duty of Vigilance Law and the German Supply Chain Act already require effective HREDD, the CSDDD goes a long way in strengthening the requirements and bringing them more in line with international standards.
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Enforcing Due Diligence Obligations
The Corporate Sustainability Due Diligence Directive creates an innovative mix of enforcement mechanisms. It relies on both administrative oversight and judicial enforcement through civil liability. Additionally, accountability of businesses for affecting stakeholder interests is strengthened by a specific environmental, social, and corporate governance duty of care for directors and obligations to link directors’ pay to climate obligations, thus ensuring that directors need to steer businesses in light of stakeholder interests. This system has the potential to effectively oblige companies to respect stakeholder interests, although some weaknesses, especially in access to justice, remain.
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Due Diligence Around the World
On 23 February 2022, the EU Commission released its draft Directive on Corporate Sustainability Due Diligence (CSDDD). It follows – and seemingly takes inspiration from – several national mandatory human rights and environmental due diligence (HREDD) laws, notably in France, (“LdV”) Germany (“GSCDDA”) and Norway (“Transparency Act”). It provides a strong legal basis and innovations to enhance corporate accountability, to strengthen stakeholder value and to create a European and possibly global standard for responsible and sustainable business conduct.
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