The Corporate Sustainability Due Diligence Directive (Directive 2024/1760) (“CSDDD” or “the Directive”), which entered into force on 25 July 2024, represents a landmark development in corporate sustainability and governance. As a pivotal step towards improved environmental and human rights practices, the Directive introduces binding obligations for companies both within the European Union and in third countries, beyond to address human rights and environmental risks throughout their global supply chains. It aims to ensure that businesses take proactive measures to identify, mitigate, and remediate potential adverse impacts related to their operations, or the operations of their subsidies and companies in their value chains.
The Directive also sets forth a structured implementation timeline, requiring Member States to transpose the Directive’s provisions into their national law within the designated period. This approach is designed to provide clarity and consistency across jurisdictions while allowing businesses adequate time to adapt to new requirements under the Directive. By creating level-field mandatory due diligence rules at an international level, the Directive marks a significant improvement in the regulatory landscape for corporate sustainability and responsibility.
Despite its transformative potential, implementing the Corporate Sustainability Due Diligence Directive (CSDDD) faces significant challenges, including legal ambiguities, ensuring extraterritorial compliance, and providing adequate support for small and medium-sized enterprises (SMEs). The complexity of aligning international standards with local regulations further complicates the enforcement of due diligence obligations across borders. In addition, the financial and operational burden on SMEs, which may lack the resources to comply with such extensive requirements, remains a key concern.
Therefore, this study explores the Directive’s potential to redefine corporate responsibility globally, emphasizing its role in shaping ethical business practices and improving accountability across industries. It highlights the necessity of coordinated regulatory frameworks, stakeholder collaboration, and an efficient enforcement mechanism to achieve its ambitious objectives. Through a comprehensive analysis, this study contributes to the ongoing discourse on sustainable corporate governance and offers insights for policymakers, businesses, and stakeholders navigating this complex and evolving regulatory landscape. It seeks to inform future discussions on the global reach and impact of corporate due diligence requirements in the context of sustainability and human rights.
This study provides an in-depth exploration of the CSDDD, focusing on its legal, practical, and extraterritorial implications, and is structured into four chapters. Chapter I provides a historical and theoretical overview of corporate sustainability, tracing the evolution of the environmental, social and governance (“ESG”) rules from voluntary initiatives to mandatory frameworks. Moreover, the corporate governance rules are also discussed.
Chapter II examines the corporate governance rules under the Directive and also the scope, the harmonization, as well as the civil liability and public enforcement rules are also briefly explained. Furthermore, Chapter III examines the Directive’s alignment with international and EU-level standards, for instance the United Nations Guiding Principles and the OECD Guidelines for Multinational Enterprises, and frameworks of the International Labour Organization Rules. Moreover, a comparative analysis of the national due diligence obligations of EU Member States, for instance the French Vigilance Act and the German LkSG, as well as the European Union stakeholder perspectives on the Directive are discussed.
Finally, Chapter IV addresses the extraterritorial application of the Directive, where it addresses the Directive’s private and public enforcement rules. Regarding private enforcement, the chapter analyzes Article 29 of the Directive, and the existing private international law rules on non-contractual obligations and jurisdiction. Last but not least, the public enforcement rules under Article 24 of the Directive are also examined with a comparative analysis under Brussels I bis Regulation. The study concludes with possible solutions to ensure effective enforcement of the Directive.