CORPORATE SUSTAINABILITY DUE DILIGENCE: A Legal Analysis of the European Directive on Responsible Business Conduct

The protection of human rights and the environment are issues of increasing importance. Such topics play a relevant role in the international legislative arena and are reshaping consumers’ preferences, governments’ strategies and business priorities. Following this trend, the concept of “Due diligence” has gained imperativeness, spreading across the globe, and finding distinct applications among regions, international organizations, and countries. It refers to the assessment, prevention, mitigation or cessation of any abuse of human rights and harm to the environment caused by businesses. In July 2024, a directive on Corporate Sustainability Due Diligence has entered into force in the European Union. This legal analysis evaluates the position adopted by the European institutions on corporate due diligence, revealing strengths and weaknesses of the directive, and highlighting the differences between the initial Commission proposal and the final text. Two case studies are explored according to the principles of due diligence, to evaluate the viability, applicability, and sustainability of the new European directive. Drawing from the evaluation of the European text and its applicability to the case studies, conclusive remarks are given on the current state of due diligence, aligning the standards of the European Union with the standards of other international organizations. The analysis concludes with a forecast on the future of due diligence for companies and legal frameworks.