Close

Europe makes great strides in introducing chain care obligation

After it first seemed that the Corporate Sustainability Due Diligence Directive (CSDDD), a European supply chain duty for business, could not get the required majority of member states, the odds have turned. Now that it has been decided to be put to a vote in the European Parliament before the European elections, it will likely be adopted.

Adobe Stock 93494284

National legislation

This finally creates clarity for European businesses. They can now start preparing for the obligations associated with this essential European directive. But first, Member States will have to incorporate CSDD into their national legislation to make it binding on companies. They will also have to set up mechanisms for enforcement and sanctions for non-compliance.


Best practice

Member states would do well to learn from Germany's experience, where a national chain-of-custody duty has been adopted earlier. Considering this as a best practice, any mistakes and dilemmas faced by the German legislature can be anticipated. Perhaps answer questions such as whether or not to incorporate a corporate governance code or other forms of director and company obligations. This will benefit not only efficiency but also speed of implementation.


Business climate

Finally, during the legislation's implementation, it is expected that there will be a discussion to weaken CSDD on subtopics, interpret it differently, or designate exceptional cases. ESG legislation stems from a commitment to the highest standards of environmental protection, human rights, and corporate social responsibility. However, if, on a global level, this means putting European companies at a severe competitive disadvantage, we risk throwing the baby out with the bathwater. ESG ideals will always have to be balanced with a healthy business environment.