Article 1: Subject matter

Andrea Shemberg and Carolyn Vaziri

Chapter 1 in Sustainable Business in Europe, 2026, pp 6-20 from Edward Elgar Publishing

Abstract: This contribution offers a commentary on Article 1 of the European Union's Corporate Sustainability and Due Diligence Directive (CSDDD), which outlines obligations for companies concerning their actual and potential adverse impacts on human rights and the environment. Article 1 both aligns with normative concepts established by the UN Guiding Principles (UNGPs) and represents some significant departures from international standards. This commentary lays out how Article 1 does both these things. By asking for pro-active steps on actual and potential negative impacts on people, and by including the foreign subsidiaries and affiliates of parent companies within the scope of the Directive, the scope of responsibility laid out reflects the idea, articulated originally by John Ruggie, that a company's responsibility to respect human rights extends across the company and its activities. However, there are a number of important departures from international standards that do not serve companies and their efforts to identify and manage risks or to become more sustainable. For example, Article 1 focuses on a company's ‘operations’ rather than its ‘activities’, potentially limiting the scope of human rights due diligence for multinationals. The Directive makes exemptions for products covered by export controls, disposal, and limited downstream activities through business relationships, which undermines a meaningful risk management approach. Finally, Article 1's failure to integrate human rights due diligence into climate transition plans leaves companies ill-prepared at the strategic level and exposes them to further legal, financial, and reputational risks.

Keywords: Value Chain; Responsibility; Due Diligence; Human Rights; Risk Management; Operations; Supply Chain; International Standards; Norms; Corporate Responsibility; Sustainability (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035326891
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