Corporate due diligence law greenlit by European Parliament

Photo credit: © European Union 2014 - European Parliament.

The final approval of the Corporate Sustainability Due Diligence Directive (CSDDD) by the European Parliament today is a crucial stepping stone in freeing global supply chains from human rights violations and environmental harm. Yet, multiple loopholes will hamper the law's potential.

Despite the severely reduced scope of the CSDDD in the last stages of the negotiations [1], the Parliament’s final approval brings the EU one step closer to corporate responsibility. Large companies present in the EU will have to prevent, mitigate and end harmful practices in their global operations and parts of their value chains. They will also have to develop and implement climate targets and transition plans to align their strategy and business models with the 1.5°C goal of the Paris Agreement.

“The resounding backing from Parliamentarians from across the EU and various political groups reflects the pressing need and broad societal and business support for the due diligence law,” said Uku Lilleväli, Sustainable Finance Policy Officer at the WWF European Policy Office.

“The law will help companies both prosper economically and uphold the European values of justice, human rights, and sustainability within the EU borders and in the wider world. But despite the positive outcome today, severe gaps remain, which will hamper the law’s ability to deliver more systemic change. To name a few, financial actors’ free pass to fuel harm, coverage of only a fraction of all environmental harms, and a ridiculously limited scope of companies are all issues that must be fixed in the coming years.”

WWF calls on EU Member States in the Council to swiftly grant final approval, clearing the way for the law to enter into force. After adoption, it will be critical to effectively transpose and implement the law, and in the next years, to fix the loopholes that will prevent it from fulfilling its full potential.

‍Editors notes:[1] WWF European Policy Office (2024). EU Member States reduce corporate due diligence rules to a shadow of their former self

Source: WWF European Policy Office