European Parliament adopts CSDDD - initial analysis

The Sustainable Textile Initiative: Together for Change (STITCH) congratulates the European Parliament on adopting the Corporate Sustainability Due Diligence Directive (CSDDD), a ground-breaking step towards better protection of workers’ rights and the environment worldwide.

Making human and environmental rights due diligence (HREDD) mandatory sends a powerful signal to all multinational companies that taking responsibility for the potential negative effects of their trading is the only futureproof way of doing business.

Although the version that is now adopted has been watered-down significantly, we consider this legislation to be a game changer, as it provides an enforceable basis for the already existing duty for companies to conduct human rights and environmental due diligence in their value chains, proportionate to size and circumstances, as prescribed in the UNGP and OECD guidelines. This means rewarding those companies already performing their HREDD on a voluntary basis by providing a more level playing field, as well as kick-starting those lagging into doing better.

A first analysis of the latest CSDDD version provides the following insights:

• For the textile industry in particular, limiting the scope to very large enterprises is regrettable, as the majority of the industry is an SME. The impact of the legislation will therefore be greatly dependant on the trickle-down effect from large companies conducting their HREDD and expecting their suppliers to do so too.
• A phased approach will give public authorities and companies more time to prepare, but entails national level laws being in place longer and positive impact of the legislation taking years, of not a decade, to materialise.
• Positive impact will depend on strong, clear and practicable European Commission guidelines, clarifying concepts such as ‘responsible purchasing practices’ and ‘meaningful stakeholder engagement’. These – sector specific – guidelines need to be founded in the knowledge and experience of expert organisations already active in promoting better working and living conditions, such as Trade Unions and MSI’s.

Despite significant concessions that were made during the prolonged negotiations in the Council leaving a trimmed-down CSDDD, we know from experience with existing due diligence legislation such as the German Supply Chain Act, that shortcomings can be mitigated in the implementation phase or – given the review clause in the CSDDD – remedied after evaluation.

Based on our long-term experience with implementing human rights due diligence and improving working conditions in the garment and textile industry – together with brands, trade unions and trade union federations, local and international NGOs, manufacturers and their associations, and many others – we are confident that the CSDDD has the potential to provide the blueprint for positive change in global supply chains and will be looking to support this in the coming years.