The European Commission Corporate Sustainability Due Diligence draft directive may have counterproductive consequences for European companies, according to ecoDa. The unclear and limitless extension of liability will risk creating a punitive framework that would undermine European companies’ competitiveness and efforts.
Unclear terminology coupled with unrealistic requirements will inevitably lead to gold-plating, fragmentation, and legal uncertainty, endangering European companies’ prosperity and durability. A risk-based approach allowing for flexibility would be preferable and certainly more effective.
To further foster this change in mindset on ESG matters, ecoDa would recommend the European Institutions to consider education as a game-changer. This approach would both help create common criteria in terms of sustainability education for board members and address potential loopholes and shortcomings in legislation while at the same time moving away from a punitive approach.