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Vote On EU Corporate Sustainability Due Diligence Law Scheduled For February 28

By Jon McGowan - Contributor

February 26, 2024

Credits @FFHR.CZ

The European Union’s Corporate Sustainability Due Diligence Directive has faced rising opposition since the final draft was released on January 20. After weeks of delays, the European Council is positioned for a vote on the directive on February 28. Despite international pressure, and behind the scenes negotiations, it is still unclear if the CSDDD has the required support or if this will be the end of the road.

As the name implies, the CSDDD, also called the CS3D, establishes a corporate due diligence standard on sustainability issues for businesses operating in the EU. In this case, sustainability most directly applies to environmental concerns, climate change, and human rights.

The new due diligence requirements apply not only to the direct actions of the company, but also to their subsidiaries and supply chain. EU based companies, as well as non-EU companies that conduct a set level of business in the EU, could become liable for the actions of their suppliers.

The final draft of the CSDDD, released on January 30, initially appeared poised for easy approval. However, that support quickly eroded following Germany’s indication they will abstain from the vote. Once Germany announced their no vote, multiple members joined in, both in public and behind closed doors, until it became clear that the European Council would be unable to get a majority vote in support.

While some member states expressed opposition based on ideological stances of their respective leaders, it has been reported that the Italian opposition was part of a deal with Germany. In exchange for Italy pulling support for the CSDDD, Germany would pull support for the EU Packaging and Packaging Waste Directive.

For EU legislation like the CSDDD and PPWD, three proposals are passed, then negotiated to the final agreement. The proposals come from the European Commission, the European Parliament, and the European Council through individually passed legislation. Those differences in the proposals are then negotiated by representatives of each body to reach a final draft proposal that is then brought back to the original three for final approval. Once approved, member states have two years to enact it into state law.

With its passage unlikely, the Council pulled the vote from its February 9 agenda. It was briefly placed on the February 14 agenda, but quickly removed. Now it is back on the agenda for February 28.

While the vote is scheduled, it is unclear if there has been any movement on the issue. As no changes can be made to the CSDDD proposal at this time, negotiations are rumored to be centered around the PPWD in an effort to bring Italy back on board with the CSDDD. Italy has expressed specific objections to the PPWD’s ban on single-use packaging and the provisions on the reuse and refilling of packaging. The removal of these provisions would cause outrage within the environmental community, but it appears to be a choice between the CSDDD and a watered down PPWD, or the failure of both.

The CSDDD is facing a ticking clock as the European Union is set to hold elections in June. The European Parliament must approve the CSDDD by March 15 for it to be adopted prior to the elections. However, it faces an earlier deadline of March 7 to get approval of the legal affairs committee, commonly referred to as JURI.

Advocates were hoping for quick approval, as the composure of the body may change on this issue, removing majority support for the CSDDD and other sustainability directives like the Corporate Sustainability Reporting Directive.



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