techUK take on the Corporate Sustainability Due Diligence Directive vote postponement
techUK is deeply concerned that internal domestic politics is undermining the final stages of two key pieces of European legislation that will heavily impact techUK members.
The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) will revolutionise how companies approach due diligence and has been in the works for two years. It requires companies operating in Europe to undertake very stringent due-diligence of their business partners and suppliers to ensure their operations are not harming the environment or complicit in human rights abuses. The law does have some issues with it (the approach of a Directive rather than a Regulation is very regrettable), however, it has been worked on for two years with the tech sector (via DIGITALEUROPE) deeply engaged, particularly on the risks associated with manufacturing devices.
You may ask ‘why do you care?’ as the UK is a bystander to the EU law-making process these days, but for us it is essential to keep on top of Brussels developments. European legislation tends to be extra-territorial and as techUK members are global in nature and outlook they often need to comply with EU laws regardless if the UK chooses to adopt them.
The tech sector and almost every other industry fully expects this to pass and has been getting ready for this change by upgrading due diligence processes, reforming governance frameworks and taking steps to ensure problems are found and addressed. As the EU is such an important market for businesses, it is likely that CS3D will become a global standard.
The drama started with the final European Council meeting that would approve the Directive, the penultimate step for a proposal to become EU law (the final step is essentially a rubber stamping at the European Parliament plenary). However, internal politics within the governing coalition in Germany saw the German government threaten to abstain citing business burdens, and other countries followed suit. This saw the vote shelved as it was clear it would not secure the required super-majority.
Now there are reports that Germany may vote in favour of CS3D as long as Italy and others withdraw support for another important, but completely separate piece of legislation - the Packaging and Packaging Waste Regulation. This is another major law that will have major cost and burden implications for businesses, but ultimately one that industry is supporting and is working extensively on with MEPs and others to get right.
This horse-trading of major reforms that will have significant implications for tech (and other) manufacturers laws is not conducive to good policy making and sends all the wrong signals to industry and actually undermines the quality of European law.
Craig Melson
Craig is Associate Director for Climate, Environment and Sustainability and leads on our work in these areas ranging from climate change, ESG disclosures and due diligence, through to circular economy, business and human rights, conflict minerals and post-Brexit regulation.
