Human rights due diligence in the EU framework 

The long-standing debate around the topic of corporations engaging in unethical practices has long been on the agenda of EU institutions and other international bodies, as can be seen through recent developments in EU law, such as the enactment of the EU Corporate Responsibility Reporting Directive (CSRD), which deals with the obligations of corporations to report on their environmental social governance (ESG) practices, and the Corporate Sustainability Due Diligence Directive (CSDDD) that requires business entities to identify and prevent negative impact on human rights and environment. 

These directives have attempted to turn “soft law” guidelines that were previously included in the UN Guiding Principles on Business and Human Rights into “hard law”. Meaning that the UN Guiding Principles used terminology such as “should” instead of “shall”, which indicates that business entities might consider respecting human rights, even though they are not explicitly required to, leaving human rights due diligence to be optionally self-regulated by companies, which is problematic.   

While there are some corporations that have set out to self-govern their corporate social responsibility obligations, this is not necessarily due to their social awareness, given that the main goal of corporations is to serve the interests of shareholders. Their primary interests would be to have economic returns from the company’s activities. Studies conducted by the British Institute of International and Comparative Law (BIICL) and the global law firm Norton Rose Fulbright in 2016 suggested that most corporations that attempted to regulate their internal corporate social responsibility have done so for reputational reasons or to avoid potential legal risks. Even though the studies are not recent, the results of new research on the motives behind ESG indicated that these were predominantly driven by regulatory pressures and stakeholder engagement.  

To really prevent breaches of human rights by corporate entities conducting their activities, we need a regulatory landscape to be put in place. The EU has addressed this through legislative instruments, adding uniformity to existing domestic provisions already introduced by several EU states.  

Focusing on CSDDD, it is binding on Member States of the EU, but also extends beyond the EU for subsidiaries, and for direct and indirect business partners of companies based in the EU participating in their chain of activities. The job of the lawmaking institutions of the EU, to strike a balance between ensuring that business partners of large companies can continue conducting their activities, which is essential for the livelihood of individuals working for those companies while also guaranteeing that human rights can be properly protected, is not an easy one. The balancing exercise also includes key considerations of rigidity of rules, effective results in terms of achieving ESG targets, and competitiveness, meaning development of the EU businesses and their competitiveness in the international market. While the EU did attempt to impose obligations on entities operating in the EU and their business partners that are responsible for supplying or providing service, these efforts not surprisingly faced criticism.   

One of the concerns was that, since the effect of the directive is cross-border, EU corporate entities might reconsider having supply chains in particularly “risky jurisdictions”. As one could imagine, this would lead to a threat to livelihood for people in those jurisdictions. CSDDD in its primary version included the provision that obliged companies should terminate contracts for non-compliant suppliers as a measure of last resort. Even though it was designed to be a “last resort measure” used in circumstances where the termination consequences are not more severe than the reverse impact on human rights caused by a business partner with whom termination of a contract takes place, there is no guarantee that this is practically feasible. “Omnibus” proposals of the European Commission amending the Audit Directive, Accounting Directive, Corporate Sustainability Reporting Directive, and the Corporate Sustainability Due Diligence Directive and postponing the application of some reporting requirements in the Corporate Sustainability Reporting Directive and the transposition deadline and application of the Corporate Sustainability Due Diligence Directive issued in February 2025 and endorsed by the European Parliament in November 2025 included an amendment of this provision to terminate contracts as a last resort, making it an optional measure.   

Another concern would be that due diligence human rights obligations are burdensome for business partners, which are SMEs, in terms of auditing requirements. Audits conducted by entities for their business partners, might be ineffective and constitute a burden for suppliers. This has to be weighed with the primary considerations behind which the legislative acts were enacted – human rights protection and the impact of a company’s activities on the environment. Omnibus proposals now require companies to conduct an assessment of suppliers every five years instead of annually.  

On 28 November 2025, the “Omnibus” proposals of the European Commission were challenged by European Ombudswoman Teresa Anjinho for not complying with Better Regulation rules. Those have also been criticised for narrowing the scope of entities that fall within the application of CSRD and CSDDD, limiting the scope for domestic laws in member states. For instance, the German Supply Chain Act, replaced with the transposition of the CSDDD, did not limit companies to which the act applies based on turnover, as has been proposed by the European Commission and later endorsed by the European Parliament in an even stricter manner.   

To conclude, the efforts by the EU to turn “soft law” guidelines into “hard law” obligations should not be underestimated. There are significant factors behind the laws enacted that will shape the future of human rights and sustainability in this context. While there are several key considerations to be balanced, such as overburdening of supply companies, on the one hand, and human rights protection, on the other, while also keeping the importance of economic and sustainable development in mind, the EU institutions are seeking to strike this balance through revising provisions set in place.