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The EU Corporate Sustainability Due Diligence Directive is About to Face a Critical Vote

February 7, 2024

On February 9, EU member states are set to pass a critical vote on the final text for a common EU framework for responsible business conduct – the EU Corporate Sustainability Due Diligence Directive . This vote will happen based on a provisional agreement reached in December. While imperfect, it meets certain key industry priorities for which the RBA has continuously advocated: its due diligence duty is highly aligned with existing internationally recognized due diligence standards (e.g., OECD standards, UNGPs); companies are mandated to take risk-based approaches to due diligence; companies are allowed to leverage existing tools and industry initiatives; and key parts of the law are subject to a harmonization provision.

Overall, the compromise agreement balances the need to promote our shared values in the economy, including our commitment to human rights and the environment, with the need for industry to have flexibility in dealing with the complex realities of global supply chains, as well as the need for caution in imposing far-reaching obligations on an industry that already faces uncertainty and complexity globally.

Of course, the law remains an ambitious standard, and certain industry asks were not met. In particular, we call on EU member states to deliver on the promise of levelling the playing field across the EU by working toward a maximally harmonized transposition, beyond the level of harmonization guaranteed by the Directive, which is currently insufficient. Industry is already facing unprecedented levels of regulatory and political uncertainty.

While views on the precise shape of the legal requirements continue to diverge – within and across stakeholder groups – from the onset, it was clear that most stakeholders, including businesses, agreed on the need for an EU-level playing field. Therefore, and to provide companies with the certainty they need to build long-term value, the RBA urges EU legislators to pass the law. No one will benefit from continued uncertainty; not industry, not people, not the planet. As with many areas of sustainability legislation, the key to success will be to take a collaborative approach to implementation, to closely monitor experiences from practical implementation, and to flexibly adjust our approaches along the way.

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