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EU Council Narrows Scope of Supply Chain Due Diligence

The European Council has adopted its negotiating position on the Corporate Sustainability Due Diligence (CSDD) directive, narrowing the standard so it will only apply to companies’ “chain of activities”. If this scope is formally adopted at the end of negotiations, this means that companies would not be required to identify, measure and mitigate environmental and/or human rights harms in relation to the use of their products or provision of their services. The Council’s position on CSDD will however cover companies’ upstream supply chain and, “in a limited manner”, downstream business partners. Their position also proposes a phased-in approach, with the rules first applying to large companies with more than 1,000 employees and a €300 million net worldwide turnover. There are further concerns that parts of the finance sector will be excluded according to the Council’s agreed CSDD position. Jozef Síkela, Czech Minister for Industry and Trade, said: “For the EU to reach its climate and sustainability goals and to ensure the protection of human rights, it is important that companies identify and prevent, bring to an end or mitigate the impact of their activities on human rights and the environment. Responsible behaviour for companies producing clothes, mobile phones and other everyday use objects is also something European customers start caring about more and more.” The Council Presidency now has a mandate to start negotiations with the European Parliament.

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