Herbert Smith Freehills responds to news that proposed corporate sustainability due diligence directive has not been approved

Responding to news that the EU Council has failed to approve the proposed corporate sustainability due diligence directive, Silke Goldberg, partner and global head of ESG at Herbert Smith Freehills, says:

"Failing to pass the corporate sustainability due diligence directive is a missed opportunity and one that will create ripples of uncertainty across boardrooms, supply chains, and the interconnected fabric of our world.

"For four years, the prospect of this directive has created high levels of uncertainty. Companies have been left wondering what form a legislative framework will take to hold corporations accountable for their impact on people and the planet. Yet, today, instead of answers, we're faced with more questions. 

"The objections raised recently by Germany and Italy - centring on concerns regarding bureaucracy and legal implications - had already cast a shadow over the directive. However, France's unexpected stance adds a new dimension to the narrative. Its attempt to scale back the scope of the regulations to exclude smaller companies would effectively exempt 80% of businesses from proposed obligations. Put together, it means companies, of all sizes, will be left wondering what next steps they should take because, even if no agreement can be reached, stakeholders in the shape of consumers, shareholders and staff, will still demand action.

"Amidst this uncertainty, the commitment of the Belgian Presidency to reassess the situation offers some perspective. Perhaps, in the months ahead, we will witness a resurgence—a collective recognition of the urgency surrounding our environmental and social challenges."