Leading the Way or Crossing the Line? The Extraterritorial Dimension of the EU Directive on Corporate Sustainability Due Diligence

Abstract With the Directive on Corporate Sustainability Due Diligence, the European Union strives to address the negative externalities of companies that arise in the global economy. The new Directive follows the example of national lawmakers by requiring large companies operating in their own jurisdiction to manage adverse impacts on human rights and the environment. These due diligence laws affect companies beyond European borders by cascading due diligence standards down transnational ownership ties and value chains. They are shifting gears in the complex engine of the global economy and have considerable impacts on stakeholders in third countries. These extraterritorial implications raise the question of what limits international law places on relevant unilateral legislation. This article assesses the Directive against the law of jurisdiction and international comity arguing that unilateral due diligence laws are an appropriate way to address transnational sustainability challenges, provided lawmakers take adequate precautions.