EU: Presentation of Directive on Corporate Sustainability Due Diligence

As part of the panel organized by EURACTIV on September 21, Dan Dionisie, Head of Unit Company Law at the European Commission’s Directorate-General for Justice and Consumers, discussed the Commission’s Proposal on the Corporate Sustainability Due Diligence Directive (CSDDD), which is in the process of trilogue negotiations between the Council, the Parliament and the Commission. According to FRUCOM, Mr. Dionisie highlighted the following points:

  • While international due diligence standards are important, the CSDDD is drafted to allow businesses to adopt their own risk-based approach. It focuses on incentives for businesses to report in a way that makes a difference rather than as just a box-ticking exercise.
  • On the interrelation between CSDDD and the Corporate Sustainability Reporting Directive (CSRD): the CSDDD is about the expectations, and the CSRD is about the definitions. The priority for the CSDDD is about having clear and actionable legislation, with a support framework and a transposition period to allow the right tools to be adopted.
  • There are concerns in developing countries about a number of legislations adopted by the EU. In this regard, the CSDDD is unique in terms of its ambition to cover all sectors and value chains. Due diligence is about investing and engaging in value chains, not about disengagement, which is a very last resort. Third countries should not be concerned about disengagement. The CSDDD would apply to existing value chains and should not be an incentive for companies to disengage.
  • Co-legislators are looking to ensure that the provisions are clear enough to ensure there is limited divergence in the interpretation by Member States. There is already discussion in negotiations on enforcement to ensure interpretation is coherent.
  • There is no de-prioritization of the CSDDD by the Spanish Presidency. The Commission is looking forward to the outcome within this mandate.

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EU: Proposal on Sustainability Reporting Standards

On July 31, 2023, the European Commission published its legislative proposal on Commission Delegated Regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards. This proposal establishes standards for companies to use in their reporting under the framework of the Corporate Sustainability Reporting Directive (CSRD). EU law requires all large companies and all listed SMEs (except listed micro-enterprises) to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment.

The European Sustainability Reporting Standards (ESRS) delegated act adopted by the Commission was formally transmitted in the second half of August to the European Parliament and to the Council for scrutiny. The scrutiny period runs for two months, extendable by a further two months. The European Parliament or the Council may reject the delegated act, but they may not amend it.

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EU: European Commission Proposes New Soil Monitoring Law

On July 5, 2023, the European Commission published a proposal for a new Directive on Soil Monitoring and Resilience. The proposed law provides a common definition of soil health, establishes a monitoring framework, makes sustainable soil management the norm, and requires Member States to identify and investigate potentially contaminated sites and address unacceptable risks for human health and the environment.

The proposal does not impose any direct obligations on farmers. It does, however, include several elements through which Member States can help farmers identify the most suitable practices for their specific circumstances, including the identification of sustainable management practices, access to financial instruments to support the implementation of sustainable soil management, and easy access to advice, training activities and capacity building.

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