How the EU’s Sustainability Due Diligence Directive Could Reshape Corporate America
One of the most important developments in corporate governance is the growing divide between the US and the EU on issues of corporate social responsibility. The starkest example of this divide comes from the new EU Directive on Corporate Sustainability Due Diligence (CS3D). The Directive holds large corporations legally accountable for protecting various human rights […]
Luca Enriques is Professor of Corporate Law at University of Oxford, Matteo Gatti is a Professor of Law at Rutgers Law School, and Roy Shapira is Professor of Law at Reichman University (IDC). This post is based on their recent paper.
One of the most important developments in corporate governance is the growing divide between the US and the EU on issues of corporate social responsibility. The starkest example of this divide comes from the new EU Directive on Corporate Sustainability Due Diligence (CS3D). The Directive holds large corporations legally accountable for protecting various human rights and addressing environmental issues, such as forced labor, collective bargaining, biodiversity, and pollution. In fact, companies are required to prevent and remediate these social and environmental harms not just in their own operations, but also in the operations of their subsidiaries and even their suppliers and distributors. Importantly, the CS3D directly applies also to American corporations that generate significant revenues in the European market.
In a new paper, we examine how the Directive will be implemented and enforced in the US.
