The European Commission opened a Feedback period on their Corporate Sustainability Due Diligence Directive (CSDDD) proposition. Through this initiative, they aim to improve the EU regulatory framework on company law and corporate governance. This week, the Economy for the Common Good (ECG) submitted a position paper to the EU Commission’s public consultation. The original publication can be found in the European Commission official website.
Position paper on the Corporate Sustainability Due Diligence Directive.
The Commission proposal is a good basis, but must be improved by the Parliament and Member States to really make a significant contribution to better sustainability due diligence:
- Sustainability due diligence should cover the whole value chain, in a risk–based and proportionate manner.
- Sustainability due diligence should cover all human rights and environmental impacts (including climate) as provided for in the international agreements to which the directive proposal refers.
- Sustainability due diligence should be extended to all companies which fall under the obligation of financial reporting.
- Sustainability due diligence should consider the perspective of those affected based on their affectedness and meaningful consultation of stakeholders in all phases of due diligence processes.
- The burden of proof must be on the company to demonstrate whether it acted reasonably or not.
- Corporate boards should be clearly required to integrate sustainability risks and impacts into the corporate strategy, while compensation for board members should be linked to the company’s sustainability performance
Recommendations on the Corporate Sustainability Due Diligence Directive
- Positive initiative
- A holistic and consistent approach towards CSRD, CSDDD and SFDR
- Issues criticized by civil society organizations
- The bigger picture: What is the purpose of companies?
Image credits: @mbaumi / unsplash
