Supply chain due diligence legislation of the European Union: Due diligence standards
The CSDDD Directive defines the due diligence standards as “adverse human rights impacts” and “adverse environmental impacts,” as defined in Articles 3.1(b) and (c) of the Directive. Specifically:
(i) “Adverse human rights impacts” are impacts on individuals arising from the abuse of any of the following human rights:
- One of the 16 types of human rights listed in Section 1, Part I of the Annex to the Directive, interpreted in accordance with one or more provisions of any of the 12 international conventions listed in Section 2, Part I of the Annex; or
- As defined in the international conventions listed in Section 2, Part I of the Annex, provided that (1) the entity causing the abuse is a legal entity/business actor, (2) the abusive conduct harms the legitimate interests protected under the international conventions listed in Section 2, Part I of the Annex, and (3) the regulated company should have identified the risk of affected human rights in advance (based on the specific risk situation and the business activities of the company).
(ii) “Adverse environmental impacts” are negative impacts on the environment arising from violations of prohibitions/obligations listed in:
- Points 15 and 16 of Section 1, Part I of the Annex (two groups of human-rights-related obligations/prohibitions directly related to the environment); or
- Part II of the Annex (16 groups of environmental obligations/prohibitions).
Compared with Germany’s SCDDA, the scope of due diligence standards under the EU CSDDD Directive is considerably broader, especially regarding environmental standards. Specifically:
- Human rights: The EU Directive’s due diligence standards include both personal and civil rights, whereas the German law mainly focuses on labour rights.
- Environment: The EU Directive covers a wide range of environmental standards, while German law focuses primarily on environmental aspects affecting employees.
Source: Compiled by the TTWTO-VCCI Research Group