The European Commission falls short of delivering an ambitious and forward-looking due diligence proposal
The European Commission published today the long-awaited Directive on Corporate Sustainability Due Diligence (CSDD). While being strongly anticipated from various sides, the proposal falls short of the expectations of sustainable businesses, civil society actors and affected communities. As stated in the proposal, around 99 % of all companies in the Union, are excluded from the due diligence obligations.
The European Commission’s new proposal is an important step to reduce harm done to people, society and the planet by companies. However, to ensure that companies are prevented from causing environmental damages and human rights violations, the European Parliament and Member States should broaden significantly the scope, strengthen directors’ duties and ensure meaningful engagement with stakeholders, claims the Economy for the Common Good (ECG).
Whilst the ECG welcomes the publication of the legislative proposal that will finally introduce EU wide due diligence obligations and prompt companies to act in a more sustainable manner, it misses the forward-looking component. Since the Commission has set in its Sustainable Finance Action Plan that it aims to attenuate short-termism in capital markets (Action 10), expectations were high that the eagerly awaited proposal could be a real game-changer in this regard. However, the new proposal falls short of the expectations and, if unamended, will not lead to the significant change that society needs.
The ECG movement calls on EU policy-makers in the European Parliament and on Member State representatives to amend the Commission’s proposal and to (1) extend the scope to all large companies and to SMEs operating in high-risk sectors, (2) strengthen directors’ obligations, and (3) ensure a meaningful engagement with stakeholders.
Read the full press release here.
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