The fate of the Corporate Sustainable Due Diligence Directive in the balance

Last week marked a pivotal moment within the Council, as the crucial vote on the proposed Due Diligence Directive suffered a setback due to opposition from certain member states.

The proposed Due Diligence Directive seeks to impose obligations for both large EU and non-EU companies with a turnover threshold of €150 million, as well as smaller companies operating in certain sectors such as textile manufacturing, agriculture, extractive industries and construction. The thresholds for companies to be included in the scope of the Directive are a critical issue for discussion and subject to change based on negotiations.

Under this proposal, companies will have a due diligence responsibility with respect to their actual and potential impacts on human rights and the environment. Specifically, they will be required to identify, assess, prevent, mitigate and remediate any adverse impacts on people and the planet.

While the proposal is aimed primarily at larger companies, it also extends their obligations to their upstream and downstream business partners. This includes all business partners involved in production, supply chain management, transportation, storage, design and distribution. As a result, smaller companies will also be affected.

Following the provisional agreement reached between the Council and the European Parliament on December 14, the final text was released by MEP Axel Voss (EPP) on 30 January and seemed to be on track for a smooth adoption.

However, certain member states subsequently expressed reservations about the directive on ideological grounds, preventing a consensus from being reached at Council meeting scheduled for February 28.

This lack of consensus complicates the adoption process, especially given the tight timeline before the elections.

Yesterday, European Union ministers met in the Competitiveness Council configuration to discuss the directive. While no final agreement was reached, the discussions appeared to be progressing favorably.

Attention now turns to March 15, the deadline for the vote of the European Parliament.