Enhancing Corporate Accountability: An Analysis of the European Corporate Sustainability Due Diligence Directive (CSDDD) and of the Corporate Sustainability Reporting Directive (CSRD), and of Their Implications for Large Companies' Obligations on Human Rights and Environmental Protection

The work provides an in-depth analysis of the European Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD), focusing on their implications for large companies’ obligations concerning human rights and environmental protection. The analysis begins with a historical context, emphasizing the evolution of corporate responsibility, especially post-industrial revolution, and the integration of human rights with social responsibility in modern corporate governance. The CSDDD mandates companies to conduct due diligence to identify, prevent, mitigate, and account for negative human rights and environmental impacts in their operations and supply chains. It applies to EU-based companies with more than 500 employees and a turnover exceeding €150 million, as well as non-EU companies meeting specific criteria. The directive sets out detailed requirements for due diligence processes, stakeholder engagement, grievance mechanisms, and the publication of annual reports. The CSRD, building on the Non-Financial Reporting Directive (NFRD), aims to enhance transparency and accountability by requiring companies to disclose comprehensive information on environmental, social, and governance (ESG) factors. It applies to large companies and listed SMEs, mandating the inclusion of sustainability information in annual reports. The CSRD emphasizes the importance of consistent, comparable, and reliable sustainability data, facilitating better decision-making by investors and other stakeholders. Both directives are aligned with broader EU sustainability goals, including the European Green Deal and the EU Taxonomy, aiming to achieve climate neutrality by 2050. They represent a shift from voluntary corporate responsibility initiatives to mandatory regulatory frameworks, ensuring that companies contribute to sustainable development and respect human rights. The document also discusses the potential effects of these directives on litigation, the adaptation of companies in high-risk sectors such as the automotive industry, and the criticisms and challenges related to their implementation. By establishing rigorous standards and accountability mechanisms, the CSDDD and CSRD aim to drive significant improvements in corporate sustainability practices across the EU and beyond.