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20/07/2024
Mining News

EU’s corporate sustainability directive: Implications for global supply chains and Africa

On 24 May, the European Union enacted the Corporate Sustainability Due Diligence Directive (CSDDD), a landmark legislation requiring large businesses to identify and mitigate negative human rights and environmental impacts across their supply chains, irrespective of where these impacts occur. The directive applies to companies with more than 1,000 employees and a net worldwide turnover exceeding €450 million, extending even to non-EU companies with significant operations within the bloc. EU member states have two years to incorporate these requirements into national law.

Championed by the French government, the CSDDD aims to enforce due diligence practices that encompass human rights abuses, environmental degradation, and other ethical concerns throughout business operations, subsidiaries, and supply chains. This move represents a significant stride towards accountability in global supply chains, positioning the EU as a leader in regulating business conduct, especially in critical sectors like mining.

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However, the directive has faced compromises to secure broad consensus, resulting in exclusions for financial institutions, arms manufacturers, and certain sensitive products like surveillance technology. This omission has drawn criticism, particularly from African perspectives, where financial flows linked to fossil fuel projects remain substantial. Despite its progressive stance on environmental impacts aligned with climate goals, the CSDDD’s exclusion of financial sectors limits its potential to address broader sustainability challenges effectively.

The directive’s implications for Africa are profound, given the continent’s role in global supply chains and its vulnerability to environmental and social impacts of mining. The continent has seen increased interest and investment in fossil fuel projects, driven partly by global demand and geopolitical shifts, such as Europe’s energy strategy amidst the Russia-Ukraine conflict.

In South Africa, contentious projects like Shell’s offshore gas exploration highlight ongoing environmental concerns and legal challenges. Recent court decisions have underscored flaws in due diligence processes, especially regarding community consultation and environmental impacts, mirroring issues across other African nations involved in resource extraction.

Moreover, the CSDDD’s development lacked sufficient consultation with Global South stakeholders, raising concerns about its applicability and effectiveness in addressing local challenges. Issues of jurisdiction and access to justice remain critical, particularly for affected communities seeking accountability from EU-based companies operating abroad.

While the CSDDD represents a step towards global business accountability, its limitations underscore the need for broader international frameworks, such as a binding treaty on business and human rights, to ensure comprehensive regulation of global supply chains. African states are urged to advocate for such standards in upcoming international negotiations, emphasizing the need for equitable governance in the extraction and trade of critical minerals amid global economic shifts and climate imperatives.

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