On Wednesday, the Corporate Sustainability Due Diligence Directive (CSDDD) failed to achieve support from a qualified majority at the final vote by the European Council. 

The vote had been delayed from its originally scheduled date of 9 February to tackle resistance voiced by the German and Italian governments. However, Wednesday's outcome was that, of the 27 EU member states, 13 abstained and one voted against the current text of the CSDD, leaving the legislation far short of the approval from 15 member states representing 65% of the EU's population required. 

This is a disappointing outcome for those who have championed the CSDDD for the last four years. The purpose of the CSDDD is to establish a corporate due diligence duty in national law compelling affected companies to identify, prevent, mitigate and account for the negative human rights and environmental impacts of their actions, including in their value chains inside and outside Europe. Supporters of the draft legislation have heralded it as critical to curbing corporate abuses of human rights and the environment. However, a fundamental objection from key members of European Council was the CSDDD's breadth and the level of administrative burden it would place on the companies within its scope given the ever-increasing complexity of global supply chains.  

Belgium, which currently holds the rotating Council presidency, has stated that its next step is to "see if it’s possible to address the concerns put forward by member states" although elections for the European Parliament are taking place this June so there is only a short window for the current legislature to reach a consensus. 

Whilst the fate of the CSDDD is currently up in the air, it is only part of the EU’s wider push for greater transparency in the field of sustainability. Other relevant legislation includes the Corporate Sustainability Reporting Directive (CSRD), which is already in force. See here for our article on the CSRD and please get in touch if you would like advice on how this might apply to you.