EU: Arms and conflict-affected areas in the Corporate Sustainable Due Diligence Directive
[...] This issue sheet focuses on the applicability of, and implications for, the CSDDD to the arms industry and in relation to conflict-affected areas. [...]
An information note published by the UN Working Group on Business and Human Rights clearly states, however, that export controls cannot replace human rights due diligence. [...]
Although the initial proposal for the CSDDD by the European Commission differentiates between some sectors (high-impact sectors, adapted duty for the financial sector), it does not make this distinction for arms or dual-use items. In other words, the arms sector would fall within the scope of the due diligence obligation. The proposal also foresees a due diligence duty that applies to the full value chain (including downstream) of the so-called established business relationship. However, it does not include any specific provisions regarding the duty (no heightened due diligence) or the normative scope (no reference to international humanitarian law in the Annex).
For its part, the Council’s general approach does single out weapons, munitions, war materials and dual-use items, by excluding export control relating to these items from the definition of “chain of activities”. Furthermore, it fully excludes the use of any product or service from the due diligence duty, regardless of the sector. The Council also does not foresee an enhanced due diligence duty for conflict-affected areas, and places additional limitations on the human rights scope.
The European Parliament’s proposal includes arms and dual-use items and does not foresee any exclusions for licenced products. The Parliament also adopts a broader approach than the Council: on the one hand expanding the number of downstream services and activities that are taken into consideration, and on the other hand requiring due diligence over the business relationship itself, not merely the narrow set of services and products delivered. However, the Parliament’s position is somewhat limited given that the due diligence duty only applies up to the point of sale. As a result, it is unclear whether due diligence would cover potential impacts related to end consumers’ use or misuse.
The Parliament’s proposal emphasises that stakeholders living in conflict-affected and high-risk areas should be classified as vulnerable stakeholders. Furthermore, it imposes an additional requirement on companies operating in locations in a state of armed conflict or a fragile post-conflict situation, to conduct heightened, conflict-sensitive due diligence on their operations and business relations by integrating a conflict analysis.
Arguably, this element might be better integrated within the identification and assessment of risks rather than within the article that defines the structure of due diligence. Finally, in terms of normative scope, the four Geneva Conventions are included within the Annex. Beyond the negotiating mandate for the trialogue, the European Parliament recently went even further following its investigation of the use of the Pegasus spyware. In a recommendation issued in June 2023 it called for dualuse items to be subject to strict human rights due diligence requirements and for licensing processes to be amended to require ongoing human rights due diligence.
The international normative framework is clear: the corporate obligation to respect human rights applies irrespective of the sector or the type of products and services. Given the significant risks that are associated with the sale of arms and dual-use items, as well as operations in conflict-affected contexts, the soft law doctrine has paid additional attention to these issues. Firstly, by clearly establishing corporate responsibilities related to the sale of arms even in the presence of a state export license; and secondly by the specific care required of any company operating in conflict-affected areas.
The position of the European Parliament provides the most appropriate basis for the CSDDD to align with this international framework. However, there are some areas that could be improved upon. For example, by explicitly extending the due diligence duty downstream to include the use of products or services, and by integrating enhanced due diligence within the section on identifying and assessing risks and impacts.
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