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1 Jun 2021

David Krebs on behalf of the German Environment Agency

Paper examines how environmental due diligence can be integrated in EU legislation

"Environmental Due Diligence in EU Law: Considerations for Designing EU (Secondary) Legislation", June 2021

The debate on sustainability related corporate due diligence obligations in global value chains has recently gained considerable momentum, in particular at EU level. However, so far, it has been dominated by the focus on human rights due diligence. By contrast, relatively little attention has been paid to the specifics of a stand-alone environmental due diligence obligation. In this respect, the main challenge remains to define a substantive normative environmental standard (“material scope”), which the due diligence obligation aims to promote.

This paper examines how environmental due diligence can be designed and integrated in EU legislation applicable to undertakings in the European Union. It provides an overview of conceivable concepts for designing environmental due diligence’s “material scope”. Namely, these include a positive and a negative general clause and various ways of referencing substantive environmental norms (international environmental agreements, local law at the “place of effect”, home state law, and soft law). Subsequently the paper examines how the issue has been solved in the Draft for a Directive on Corporate Due Diligence and Corporate Accountability adopted by the European Parliament on March 10th, 2021: The relevant provision can be categorized as a combination of referencing international (hard and soft) law instruments and EU environmental norms that shall be listed in an annex. This legislative approach represents a significant shift from what was proposed by the Rapporteur in the original draft report (a negative general clause). However, the paper suggests to combine both approaches rather than choosing one of them...