Since the adoption of the renewed EU strategy for Corporate Social Responsibility in 2011, inspired by the UN Guiding Principles on Business and Human Rights, the EU has made efforts to foster responsible business conduct and enhance access to remedies for victims of negative environmental and human rights impacts generated by corporate activities. As voluntary approaches have proved insufficient in generating the necessary adjustments in business operations, the European Commission presented its proposal for the Corporate Sustainability Due Diligence Directive (CSDD) in February 2022. This legal instrument will serve various purposes: it will level the playing field for large companies in the EU, introduce a legal standard of care through the due diligence process, and ameliorate the hurdles that victims of harmful corporate activities face in seeking justice against multinational enterprises with significant economic power. The CSDD proposal will require large businesses operating in the European internal market, both European and non-EU companies, to carry out due diligence concerning the negative impacts on human rights and the environment, including those of their subsidiaries and business partners. The sustainability due diligence process demands, among other things, identifying actual or potential adverse human rights and environmental impacts, preventing or mitigating potential impacts, and ending or minimizing actual impacts in business activities. The extent of this responsibility in companies' value chains is a debated topic in the proposal, as it is a key factor in determining civil liability for harms caused by companies' lack of compliance. The civil liability rule introduced by CSDD may help victims pierce the corporate veil and claim responsibility from parent companies for the damage caused by their subsidiaries and business partners' activities when the parent company fails to fulfill its due diligence obligations. Together, the due diligence requirements and the civil liability rule in the directive will fill the legal gap in the protection of human rights and the environment, taking into consideration for the first time the particularities of transnational civil litigations, the extent and nature of the damage, and the power imbalances between the parties in dispute. However, are these promising provisions capable of making a real change? There is sufficient empirical evidence confirming that big companies use the principle of limited liability strategically—not only within corporate groups through their subsidiaries but also through their business partners—to reshape the boundaries of the company and minimize liability risk. Research suggests that the CSDD's promising provisions may not reduce the frequency of negative impacts on human rights and the environment, as the root causes that make such harms possible may lie in how corporate law is currently conceived.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:su-229378 |
| Date | January 2024 |
| Creators | Røren Sánchez, Johana Carolina |
| Publisher | Stockholms universitet, Juridiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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