A Landmark Decision
After nearly five years of public consultations, negotiations, and corporate lobbying, the EU ministers have given their final approval to a potentially revolutionary law: the Corporate Sustainability Due Diligence Directive (CSDDD). This directive aims to reshape the way large businesses operate, steering them towards a more sustainable future.
What is the CSDDD?
The CSDDD is designed to mainstream corporate sustainability actions, moving beyond voluntary measures to mandatory regulations that could have a global impact. But what exactly does this directive entail, and what should it avoid to be successful?
The Path to Approval
The approval of CSDDD was a quiet yet significant moment. Despite intense debates and extensive press coverage during its development, the final approval was relatively low-key. This contrast highlights the importance of the directive, which almost faced blockage by certain member states.
Key Goals of CSDDD
- Mainstream Corporate Sustainability: Introduce mandatory measures for corporate sustainability, going beyond voluntary actions.
- Global Impact: Set a legal baseline for companies to address human rights and environmental risks.
- Long-term Engagement: Encourage companies to use CSDDD as a tool for long-term engagement and improvement in global supply chains.
What CSDDD Should Avoid
- Harming Small-scale Producers: Ensure that large companies do not pass the compliance costs down to small-scale producers and suppliers.
- Disengaging from Risky Supply Chains: Companies should not simply withdraw from risky supply chains but should work to improve standards through collaboration and engagement.
Collaborative Effort Needed
For CSDDD to succeed, it requires a collaborative effort from businesses, governments, and civil society. The new set of incoming Members of the European Parliament (MEPs) and European Commissioners must prioritize its effective implementation.
Moving Beyond Political Debate
CSDDD now needs to be seen as a call to action. Governments in the EU must engage in supporting the directive’s goals, creating an environment where civil society, companies, suppliers, and impacted communities can work together.
The Role of World Benchmarking Alliance
At the World Benchmarking Alliance, we analyze the sustainability performance of the 2,000 most impactful companies globally. Our data underscores the need for mainstream corporate due diligence across all sectors.
Unlocking New Opportunities
CSDDD has the potential to be a catalyst for long-term value creation. Companies that embrace the directive can unlock new opportunities, drive innovation, and build resilience against future supply shocks.
Conclusion
Is CSDDD the single solution to all problems in global supply chains? No, but it is a monumental leap forward. It sets a legal standard for addressing human rights and environmental risks and ensures that failure to comply will have consequences. By embracing CSDDD, companies can integrate sustainability into their core strategies, driving innovation and productivity while contributing to a more sustainable future.
