By Dominic Adeeda

The recent consensus by the EU Council on the Corporate Sustainability Due Diligence Directive marked a significant milestone towards corporate responsibility and sustainability.

This directive, aimed at fostering sustainable and responsible corporate behaviour, carries consequential impacts and benefits not only for the European Union but also for the Global South, including Uganda.

Despite the mortifying concessions in the final text adopted, the directive presents an opportunity for the single most important tool on due diligence after the United Nations Guiding Principles on Business and Human Rights.

The core of this directive lies in establishing a corporate due diligence responsibility, ensuring that companies identify, prevent, mitigate, and account for negative human rights and environmental impacts within their operations and value chains.

Large EU companies falling under the scope of the directive on the specific criteria of size and turnover are mandated to comply with these due diligence processes. Directors are equally incentivized to oversee due diligence processes, integrate sustainability considerations into decision-making, and align business strategies to sustainability frameworks.

In the global south, the issue of corporate accountability in global supply chains has come to the forefront of discussions surrounding ethical business practices.

The complexities of modern supply chains, spanning across continents and involving numerous stakeholders, have raised concerns about transparency and accountability.

Indeed, global supply chains present unique challenges due to their vast and often opaque nature. Issues such as forced labor, environmental degradation, and other human rights violations usually occur at various stages of the supply chain, making it difficult for corporations to monitor their activities.

This directive to companies in the largest single market in the world – the EU has implications for countries like Uganda.

Through the directive’s requirements, companies are compelled to undertake due diligence in their supply chains and meaningfully engage with the local communities, including in their supply chains which presents opportunities for empowerment and sustainable development.

With trade between Uganda and the EU standing at approximately 1.5b euros, the directives’ emphasis on sustainability-related practices and adherence to international standards can foster long-term sustainable development through responsible business practices.

Inevitably, this will see many companies and business entities in Uganda complying with the due diligence requirements to access the EU market. Conversely, large EU companies will also consider the directive when establishing strategic business relations with companies here in Uganda.

While the directive presents a robust framework for corporate responsibility, challenges may arise in its implementation, especially for companies across the value chain. Issues such as capacity building, access to finance, and adaptation to new sustainability standards may pose initial hurdles.

However, these challenges also present opportunities for collaboration, and innovation that can benefit both companies and communities. For many companies with extensive international [supply chain] operations, balancing due diligence requirements with operational and other regulatory realities will be crucial to their operations and compliance with the directive.

In terms of benefits, the directive will foster improved human rights and environmental protection by providing an important framework to hold companies accountable for adverse impacts in their operations and value chains. The directive’s focus on due diligence policies ensures that companies address potential adverse impacts, thereby promoting transparency and accountability in their operations.

The EU corporate sustainability due diligence directive represents a pivotal step towards ensuring that companies prioritize human rights, environmental protection, and sustainability in their operations.

By navigating the intricacies of global supply chains and prioritizing sustainability, the directive sets a foundation for a more sustainable and ethical [global] business landscape. The impact of the directive will extend beyond EU corporate boardrooms and influence due diligence and sustainability standards globally.

The writer is the project officer, Uganda Consortium on Corporate Accountability (UCCA)