Today, the European Parliament has adopted its negotiating position on the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). A majority of 366 Members of the Parliament voted in favour of almost all the amendments endorsed by the Committee on Legal Affairs in April, with 225 votes against and 38 abstentions.
The vote reflects cross-party support for an enhanced contribution by businesses to sustainability and a clear mandate for the rapporteur to negotiate with the Commission and the Council.
The Parliament’s proposed amendments reinforce the risk-based approach to due diligence compared to the Commission’s proposal and the Council General Approach, in line with international standards on business and human rights. They also strengthen the provisions on stakeholder consultation and due diligence duties.
The text adopted by the Parliament is a step forward regarding the contribution by the financial sector to more sustainable value chains. Investors will have to work with their investees in order to tackle adverse impacts on human rights and the environment.
Regarding the duty of companies to contribute to climate action, the plenary strengthened the Commission’s proposal to require that companies adopt and implement transition plans. The adopted amendments detail the content of transition plans to ensure that companies contribute to global climate goals. Moreover, Parliament incorporates the proposal by its Committee on the Environment to link variable remuneration to climate transition plans.
On the downside, the final outcome falls short of ensuring a coherent, company-wide implementation of due diligence by requiring oversight by directors. This is crucial in order to prevent compliance departments from operating in a silo. Not requiring the involvement of directors is a key shortcoming of the plenary outcome, including relative to the Commission proposal, which was already only a first step towards clarifying directors’ duties.
By adopting a negotiating position for the European Parliament, the vote in Plenary today concludes the first stage of the legislative process, where the Parliament and the Council adopt their position relative to the initial proposal by the Commission. Now, the three institutions will enter into trilogues to agree on the final shape of the directive. Frank Bold calls on all institutions to prioritise the negotiations for the CSDDD in order to reach agreement on it before the end of the mandate.
The study on the sustainability disclosures of 100 influential companies from high-impact sectors provides an early reflection on the general readiness for businesses in the EU to meet the expectations of the upcoming EU sustainability rules and standards. Our report contributes to identifying the main challenges, as well as to highlight emerging good practices.
Thanks to legal support from the Frank Bold expert group, the Czech Neighborhood Association Uhelná, which has been opposing the adverse effects of mining at the Polish Turów mine, has achieved a significant milestone: at their initiative, the Czech Environmental Inspectorate (CEI) launched an investigation to assess whether mining activities at Turów are causing long-term water loss on the Czech side of the border. This is one of the first cases in which the Czech office has applied the Act on the Prevention of Ecological Damage. The Inspectorate has also included the Polish mining company PGE in the proceedings.
Join us for our upcoming webinar where we present the findings from our analysis of sustainability disclosures by 100 large EU companies in high-impact sectors.
