Directive on Corporate Sustainability Due Diligence: the proposal finally unveiled by the Commission must be improved

Paris, 23 February 2022 – After many delays, the European Commission has just published its proposal for a directive imposing a corporate duty of vigilance in human rights and environmental matters. Although it marks a long-awaited first step, this proposal presents a series of loopholes that seriously threaten its ambition. It is now up to the Parliament and the Council to improve the text.

Five years after the adoption of the pioneering French law on parent companies’ duty of vigilance, the Commission’s proposal had been eagerly awaited since the announcement in April 2020 of a directive on the subject by Didier Reynders, the European Commissioner for Justice. In March 2021, the European Parliament adopted a resolution by a large majority, calling on the Commission to legislate.

Like the French duty of vigilance law, the Commission’s proposal would compel companies to put in place measures to prevent human rights and environmental abuses committed by their subsidiaries and by their direct and indirect suppliers and subcontractors [1]. Failure to do so could result in liability and an obligation for companies to compensate victims.

Although we welcome the publication of the text, as it stands, it contains many loopholes that could challenge its effectiveness. The intense lobbying of European business organisations seems to have left its mark. [2]

In particular, the proposal relies heavily on the adoption of codes of conduct by companies, the insertion of clauses in contracts with their suppliers, as well as the use of private audits and industry initiatives. More than ten years ago, it was precisely the ineffectiveness of these measures that led our organisations to call for a binding duty of vigilance. These provisions are loopholes that companies could use to escape liability.

Civil society demands for improved access to justice and compensation for the victims have been only partially heard. Even if companies could be held liable, as the text stands, the burden of proof is still borne by the victims, who would have to prove that the company has failed to respect its obligations. Moreover, the possibility currently provided for by French law to request a preventive injunction to the courts before any damage occurs is not explicitly envisaged in the  proposal.

The Commission also proposes a very restrictive approach to environmental matters. It could exclude from the directive’s scope some environmental damages currently covered by French law [3]. It limits itself to requiring companies to draw up a climate plan, and thus completely misses the urgent need to regulate large companies’ greenhouse gas emission pathways.

Finally, contrary to the European Commission’s initial ambitions, this proposal does not provide for an in-depth reform of the governance of large companies.

After many months of waiting, it is now up to the European Parliament and the Member States to amend the Commission’s proposal and negotiate the text. Our organisations will continue to mobilise to ensure that the final provisions of the directive put an end to the impunity of multinationals and facilitate access to justice for right-holders.