The most important for the legal regulation of sustainable corporate governance is the latest proposal of the EU directive, which introduces the duties of corporate sustainability due diligence (corporate sustainability due diligence directive, CSDDD, proposal 2022); that is, the duties of companies (also from third countries) to define actual and potential negative impacts on the environment and human rights, and the duty to prevent and eliminate them (also in business chains). It seems that the voluntary action did not lead to a large-scale improvement in all sectors, so negative externalities of EU production and consumption are noticeable in the Union and outside. In this regard, the CSDDD also relies on the OECD due diligence guidelines for responsible supply chains of minerals from conflict-affected and high-risk areas, the OECD guidelines for textiles and footwear and, in collaboration with FAO, the guidelines for agriculture and food.
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The EU promotes corporate social responsibility (CSR) or responsible business conduct (RBC) with the aim of implementation of sustainable development (the so-called green transition) and respecting human rights in the economy. Krajewski and Faracik (2020) analyse the existing legislative approaches to mandatory Human Rights Due Diligence and proposals by non-state actors, concerning the scope of potential EU legislation on binding human rights due diligence obligations for companies.
At the level of companies, awareness of the importance of the effects of the operations of companies on the environment and society has been rising in recent years, but the so-called i. the voluntary approach to sustainable governance without legal sanctions did not produce comprehensive and uniform results. A harmonized legal framework for sustainable governance in the EU is necessary, as it will create greater legal certainty and equal competitive conditions between companies, as well as uniform regulation of the responsibility of companies and management for the negative impacts of their activities on the environment and for violations of the economic and social rights of employees.
Better awareness of companies and stakeholders about the negative impacts of companies on the environment and human rights can significantly contribute to better risk management in this area. However, key shifts in respect of the requirements of sustainable development in the long term and better protection of human rights and the environment, more sustainable investments and the general improvement of practices related to sustainability can only be ensured by binding and uniform corporate law rules of due diligence of management and compensatory liability of companies for sustainable development.
The international community, especially the EU, promotes sustainable corporate governance (SCG) corporate social responsibility (CSR), or responsible business conduct (RBC) primarily with the aim of implementing sustainable development (green transition) and respect for human rights in the economy. For example, Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, International Covenant on Economic, Social and Cultural Rights, UN Convention on Biological Diversity, OECD Guidelines for Multinational Societies, etc. For example, Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, International Covenant on Economic, Social and Cultural Rights, UN Convention on Biological Diversity, OECD Guidelines for Multinational Societies, etc.
SCG is thus, albeit slowly, but with timid steps, steadily making its way to the forefront of legal regulation. Legal measures in different countries and sectors related to CSR are very diverse and different, therefore creating unequal conditions on the EU market and the global market. The diversity stems from differences in the awareness and responsibility of corporations and politics towards issues of sustainable development, environmental and climate issues, and respect for human rights, especially labor rights.
In this article, we use the method of legal analysis, the comparative legal method and the method of scientific analysis of current knowledge in the field under consideration. Where appropriate, we use the method of regulatory evaluation of the existing solutions in the valid EU and member states regulations of sustainability issues.