Controversial Corporate Sustainability Due Diligence Directive approved in the EU

The corporate sustainability due diligence directive (CSDDD) was approved at today's meeting of the Committee of Permanent Representatives of the European Union (COREPER). Estonia remained abstained, as the agreed solutions in the directive are not in line with Estonia's positions.

According to Minister of Justice Kalle Laanet, Estonia supports the general sustainability goals of the directive and considers human rights and environmental protection important. "At the same time, Estonia's position has always been that we have to find better ways to achieve the goal rather than introduce excessive bureaucracy. This has also been one of the reasons why we have not supported the directive." According to Laanet, opinions were divided both in the Council of the EU among the Member States and within the European Parliament. At the meeting of the plenary assembly of the European Parliament (held on March 12), it was expressed that the goal of moving towards sustainable supply chains must be achieved primarily by increasing the competitiveness of companies, and not by burdening them with excessive obligations. "Among other things it was emphasized that although the goals are important, the planned rules would be too burdensome for companies who have already been subject to various costly rules recently. The goal of moving towards sustainable supply chains should primarily be through motivating companies, not punishing them," he explained. In the text of the directive approved today, a compromise regarding the higher turnover rate and number of employees was introduced. In other words, the initiative will now regulate companies with an average of 1,000 employees and an annual turnover of at least 450 million euros. "When only very large companies remain in the scope of application, they will indeed have a greater ability to introduce the requirements stipulated by the initiative into their processes. At the same time, in my opinion, this does not eliminate the nature of the problem, as small and medium-sized companies will also be indirectly affected through supply chains," explained the Minister of Justice. Estonia has previously expressed that it does not support the adoption of the directive in the presented form, as the rules resulting from it are unclear and it is not clear what obligations and the accompanying responsibility would fall on entrepreneurs.