The adoption of the Corporate Sustainability Due Diligence Directive (CS3D/Directive) – on May 24, 2024, by the Council of the EU (Council), following a favorable vote in the EU Parliament a few weeks before, put an end to months of lively debate on both the scope and the content of this regulation.
Although the goals of the CS3D are broadly shared by EU member states, its adoption was met with heated debates over its impact. The debates were ultimately marked by the blockage of countries that were concerned with preserving their national interests and maintaining their EU competitiveness. The legislation requires EU Member States to establish, by country-specific legislation, minimum requirements for corporate entities to identify, disclose, monitor and remediate any negative impacts of their chain of activities on the environment and human rights. The CS3D requires EU Member States to monitor the direct and indirect business relationships of their corporate entities’ supply chains regardless of the location of those entities and also requires each Member State to set up complaint and reporting mechanisms, as well as the introduction of a fault-based liability regime in case of any noncompliance.
France and Germany have been defending their existing models, namely, France’s Law on the Duty of Vigilance (Loi sur le devoir de vigilance – Loi n°2017/399) (LDV) and Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz) (LkSG). With the adoption of the CS3D,
France and Germany will now have to blend their existing national requirements with the harmonized framework prescribed by the Directive.
Our insight looks at the impact of the CS3D on existing national French and German laws and the outlook for companies in these countries.
