26 September  |  13:00-14:00 ICT

From Compliance to Influence: Redefining Asia-Pacific’s engagement with mandatory due diligence

Session description

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Conducted in a debate format, the session will bring together diverse stakeholders to examine the Corporate Sustainability Due Diligence Directive’s (CS3D) potential to reshape due diligence practices in Asia and the Pacific and consider the broader impact on companies, governments, financial institutions, and rights holders. The session will bring perspectives from the Global South, addressing key opportunities and challenges to generate actionable insights on how regional stakeholders can engage with EU policymakers and corporations to influence the enforcement and implementation of the CS3D. The discussion will also emphasize the importance of collaboration and coalition-building to ensure that responsible business practices are adopted and meaningful remedies are accessible on the ground.​

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Objectives

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• To assess how the CS3D will influence due diligence practices and business conduct in Asia and the Pacific.

• To explore opportunities for strengthening access to remedies under the CS3D while addressing potential challenges for regional stakeholders.

• To develop strategies for engaging with EU policymakers and businesses and fostering coalitions to promote effective due diligence and responsible practices.

Questions

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The following questions may guide the debate, though others may also be raised:

• How will the CS3D impact due diligence in Asia and the Pacific? Will it drive change or maintain the status quo, and what are the implications for companies, governments, and rights holders?

• What opportunities and challenges does the CS3D create for strengthening access to remedies, and how can stakeholders in the region address them?

• How can regional stakeholders influence CS3D enforcement in the EU, engage policymakers, and avoid unintended consequences?

• What coalitions are needed to promote effective due diligence, stakeholder engagement, and responsible purchasing practices by multinational corporations

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Background

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In May 2024, the European Union (EU) adopted the long-awaited Corporate Sustainability Due Diligence Directive (“CSDDD” or “CS3D”). The CS3D is substantially aligned with the risk-based due diligence approach of the UNGPs and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines), despite the political compromises made along the legislative process. 
In terms of access to remedy, the CS3D requires EU Member States to designate one or more supervisory authorities to enforce compliance with corporate due diligence obligations. Notably, supervisory authorities may initiate investigations independently or in response to substantiated concerns from individuals or legal entities, including those from Asia and the Pacific. Moreover, the CS3D mandates EU Member States to ensure that companies are held civilly liable for damages resulting from non-compliance with their due diligence obligations.

While acknowledging the CS3D as a significant global milestone in promoting human rights and environmental due diligence (HREDD), concerns about potential unintended consequences of the Directive persist.  For instance, companies subject to the CS3D’s due diligence obligations may choose to divest from high-risk contexts rather than improving their due diligence efforts. Another fear is that such companies may place unmanageable expectations on their suppliers, instead of taking shared responsibility (e.g., through responsible purchasing practices and business models) for adverse impacts as contemplated by the Directive. 

The 2023 UN South Asia Forum on Business and Human Rights raised similar questions and concerns. For example, the participants debated the potential of the CS3D to address power imbalances in global value chains and raised concerns about placing the burden of responsible business conduct on the Global South. Speakers also emphasized the importance of actively shaping the implementation of the CS3D in EU capitals and corporate headquarters to achieve more effective outcomes on the ground. Additionally, they explored ways to hold multinational enterprises accountable for adopting responsible purchasing practices, ensuring access to effective remedies, and meaningfully involving trade unions, civil society organizations (CSOs), and rights holders in corporate due diligence and remediation efforts.

Now that the Directive has been adopted other questions have emerged, including whether the CS3D can fulfill its intended purposes despite the political compromises made to secure approval of the Directive. It is pertinent to discuss the incentives for companies to tackle issues on the ground instead of engaging in creative compliance. The CS3D could be a game changer for ensuring meaningful due diligence, stakeholder consultation, and access to effective remedies in Asia and the Pacific, or it may continue to maintain the status quo of ticking boxes.

The evolving discussions at the national, regional and global levels underscore that significant change is underway. Hence, the time is ripe for stakeholders from Asia and the Pacific to decide on how they will engage in the rapidly evolving landscape on due diligence.