Regulating the Sustainability Transition The Corporate Sustainability Due Diligence Directive Ahead of the Trilogue

The European Parliament’s adoption of its position on the Corporate Sustainability Due Diligence Directive (CSDDD) last week marks a breakthrough for transnational corporate regulation. At a moment when the EU Green Deal was facing open opposition from within the European People’s Party Group (EPP), rapporteur Lara Wolters (S&P) withstood lobbying efforts until the final minute and secured a majority for her report. With a strong mandate for the Parliament in the upcoming Trilogue, the EU has come a big step closer to passing the most ambitious due diligence legislation worldwide.

The EU legislation will be the apex, for now, of the transnational movement around corporate accountability for human rights violations. Ten years ago, the factory collapse of Rana Plaza in Bangladesh epitomized the weak regulatory framework for global value chains where, in law and broader parts of public opinion, rights violations along value chains were considered ‘too remote’ to be connected to the responsibilities of lead firms. Since then, much has changed in political discourse, consumer perception and ultimately also legal baselines. The catalyst has been a unique set of transnational rules, the UN Guiding Principles on Business and Human Rights (UNGP) of 2011. The UNGPs redefined the terms of the debate around corporate accountability with respective responsibilities of states, companies and civil society and put forward ‘due diligence’ as a new legal mechanic through which lead firms ought to scrutinize their value chains. Like the German Supply Chain Act of 2021, the CSDDD largely follows the UNGP, it is transnational both in its reach and the origins of its underlying concepts.