The transformation of the Human Rights-based economy in Europe : comments on the proposed corporate sustainability due diligence directive

Abstract

Published online: 15 December 2022The authors consider that the proposed EU Corporate Sustainability Due Diligence Directive will facilitate the transformation of the Human Rights-based Economy in Europe from voluntary Corporate Social Responsibility to a mandatory Due Diligence Obligation. The sustainable development of human rights and environment will become an essential element in the operation of market economy. Nonetheless, given that the proposed Directive will unilaterally set a high threshold for market access to trade and supply chains, the authors contend that it will be confronted with the legal challenges of incompatibility with EU law and some of its fundamental principles. Additionally, a regulatory gap may occur in implementing the proposed Directive among the member states. In terms of its external dimension, the proposed Directive embodies the technique of extraterritorial extension of EU law to third countries and foreign entities, which will extend its application to non-EU entities through the spill over effect of the supply chain. Moreover, the proposed Directive expands the jurisdictional basis of the member states’ courts to corporate accountability, which will further trigger jurisdictional conflicts between EU member states and third countries as it intervenes in the judicial sovereignty of the latter on human rights and environment. In conclusion, the authors suggest that the Chinese government take constructive measures to address the extraterritorial extension of the proposed Directive on China and Chinese companies