HHS ILSA Law Journal Issue I - 2025

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EDITOR-IN-CHIEF’S NOTE

Dear readers,

On behalf of the Editorial Board, I am pleased to present to you the first issue of the HHS ILSA Law Journal for 2025.

Since its founding in 2016 under the auspices of the Hague Chapter of the International Law Students Association (HHS ILSA), this Journal has served as a platform for students and alumni of the International and European Law Programme at The Hague University of Applied Sciences to engage critically with pressing legal developments. By encouraging rigorous academic inquiry and thoughtful debate, we aim to shed light on the evolving challenges international and European legal systems face

The theme of this issue Modern Transnational Corporations and Law is both timely and necessary. In recent decades, the power and reach of the world’s largest transnational corporations have expanded significantly. From shaping consumer habits to influencing government policy, their impact on societies across the globe cannot be overstated. As these corporate giants grow in influence, so too does the urgency to understand how they interact with national and international legal frameworks.

This edition of the Journal explores the legal mechanisms that regulate corporate behaviour across borders, how corporations themselves shape legal norms, and the role of the international community in ensuring accountability and equity. Our contributors examine these complex dynamics with clarity and critical insight, offering perspectives that span disciplines and jurisdictions.

We are proud to present a selection of articles that reflect our authors' scholarly curiosity and analytical rigour. We hope that this issue will not only inform but also inspire further discussion on how legal systems can evolve to meet the realities of an increasingly corporate-driven global order.

On behalf of the entire editorial team, I wish you an engaging and thought-provoking read.

Kind regards, Mr Illia Gats

2024-2045 Editor-in-Chief of the HHS ILSA Law Journal

GUEST EDITORS

Mr Jaime-de-Jesus Lima LL.M.

Mr Jaime-de-Jesus Lima is a lecturer in Corporate Law, Private International Law, Procurement and Contract Management, and Comparative Property Law at The Hague University of Applied Sciences (THUAS). He brings extensive professional experience to his academic work, having served in leadership and specialist roles in the international legal and corporate services sectors.

Before joining THUAS, Mr Lima held the position of Global Head of Practice – Corporate Secretarial Services at TMF Group inAmsterdam. In this role, he coordinated international project teams and legal specialists responsible for onboarding multinational clients across multiple jurisdictions, advising on corporate legal compliance in both Civil and Common Law systems. He was a key escalation point for clients and internal teams alike and contributed to the development of global best practices in corporate governance services.

Earlier in his career, Mr Lima worked as an editor and legal translator with Caselex and Lingo24. His workincludedtranslatingandediting legal and financialdocuments in English, French,Dutch, and Portuguese, as well as researching and summarising landmark EU Business Law, IT, and Media Law cases. He also ensured editorial consistency and conducted quality control of legal translations.

Mr Lima’s broad expertise, gained across academic, legal, and corporate environments, enriches his research and teaching with a uniquely practical perspective.

Mr Sagar Suhas

Mr Sagar Suhas is a Lecturer in International Taxation and Transfer Pricing at The Hague University of Applied Sciences (THUAS), where he brings a decade of international legal and advisory experience to the classroom. His career spans both legal practice and academic instruction, reflecting a unique combination of technical expertise and pedagogical insight.

Mr Suhas began his professional journey in India, working in the Direct Tax Department of one of the country’s leading law firms. In 2016, he graduated cum laude from the Advanced LL.M. in International Tax Law at the International Tax Center, Leiden University. He then joined the Amsterdam office of Baker McKenzie, where he served for over seven years as a Foreign Tax Advisor in the Transfer Pricing Team of the International Tax Department. His work at Baker McKenzie operated at the intersection of law, economics, and finance, advising multinational clients on complex pricing strategies and cross-border tax compliance.

In addition to his professional advisory work, Mr Suhas has been a committed educator.Alongside his teaching role at THUAS, he has delivered guest lectures at the International Tax Center in Leiden, and taught previously at Erasmus University Rotterdam and the University ofAmsterdam. He currently also serves as Lead Counsel – Tax at Bombay Law Chambers, further anchoring his academic work in real-world legal practice.

Mr Suhas’s cross-continental career and experience in both Common and Civil Law jurisdictions enrich his contributions as a guest editor, offering readers of the journal a rigorously global and interdisciplinary perspective on taxation and international business law.

ACKNOWLEDGEMENTS

The ILSALaw Journal would first like to thank the authors who shared their outstanding contributions in this issue. We are incredibly grateful for the unwavering trust, patience, and enthusiasm they showed towards the realisation of this publication.

We would also like to take this opportunity to express our appreciation to the Guest Editors: Mr Sagar Suhas and Mr Jaimie-de-Jesus Lima. We are deeply thankful for the unparalleled support and guidance they have provided us in conducting the selection and editorial process.

The Journal would also like to thank the 2024-2025 ILSAManagement Board for its continuous support and encouragement. We would like to extend our gratitude to President and Treasurer Ms Vladimira Rusinova, Vice-President and Head of Social Events Ms Kaja Pilatowicz, Head of Main Events Chiara Fabbietti, Head of Marketing Ms Viktoria Pepe, and Editor-in-Chief of the HHS ILSALaw Journal Mr Illia Gats.

Finally, we would like to thank the editorial team for their diligence and determination. The Journal would like to express its most sincere appreciation for the participation of its members, including Managing Editor Ms Wiktoria Stumpf and Editors MsAiysha Malik, Mr Dmytro Petkun, Mr Gellart B. Pall, Ms Lilu Chkhartishvilli, Ms Maša Vujasinović, Ms Natalia Malecka, Ms Maria Pătraşcu and Ms Maria Enea

The selection process was solely conducted by the Guest Editors to avoid any bias and ensure that the selection was based on merit.

“Modern

Transitional Corporations and Law: Corporate Social Responsibility (CSR) in the Digital

Age – The Importance ofAddressing Ethical Concerns inAI andAutomation.”

I. Introduction

Conventional frameworks of corporate social responsibility (CSR) are coming under pressure as automation and artificial intelligence become more and more integrated into business strategies and operations. Modern business digital transformation offers previously unheard-of capabilities, but it also presents difficult moral conundrums. The use ofAI Technologies raises concerns about social impact, accountability and transparency due to issues like algorithm bias and data privacy in order to ensure that technological innovation is in line with human rights and wider societal ideals, this article makes the case that corporate social responsibility must change to incorporate digital ethics concepts. In the digital age, modern organizations can only uphold public trust and fulfil their responsibilities by integrating ethical AI practices into CSR.

Modern Corporate Social Responsibility frameworks must urgently incorporate digital ethics principles to ensure responsibleAI deployment. This is what ChatGPT has to say about the need for these frameworks:

“Rapid advancements in Artificial intelligent (hereinafterAI) and automation are transforming industries, with corporations adopting these technologies to enhance efficiency, innovation, and global competitiveness. However, these transformations come with ethical challenges, particularly concerning data ethics, fairness, and job displacement, which are central to modern Corporate Social Responsibility (CSR).”1

- AI - ChatGPT, 2025.

1. What is Corporate Social Responsibility (CSR)

Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment.2 Companies become aware and responsible on how they impact their customers and society in different ways, such as environmentally, ethically, and financially. Engaging in CSR means that a company operates in ways that enhance society and the environment instead of contribution negatively to them; they are responsible for themselves and their shareholders. This helps promote a positive brand image. 3

1 Artificial Intelligence, ChatGPT accessed 25April 2025.

2 Fernando J, ‘What Is CSR? Corporate Social Responsibility Explained’ (Investopedia) <https://www.investopedia.com/terms/c/corp-social responsibility.asp#:~:text=Corporate%20social%20responsibility%20is%20a,positive%20brand%20image%20for% 20companies.> accessed 25April 2025.

3 ibid.

2. What is Artificial Intelligence (AI)

According to IBM, artificial intelligence (AI) is “technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.”4 AI has emerged as a transformative force in today’s modern world, reshaping the competition within the internal market and has a transnational cooperation function. The Global AI market, according to Grand View Research is supposed to have an annual growth rate of 38.1% from 2022 – 2030, showing the importance of AI in the business world.5 To further underscore the significance ofAI, Micro Sourcing provides some key statistics: such as 77% of companies are either using or exploring the use ofAI in their businesses. 6 83% of companies claim thatAI is a top priority in their business plan,7 AI could increase labour productivity growth by 1.5 percentage points over the next ten years.8Globally, AI-driven growth could be nearly 25% higher than automation withoutAI,9 56% of businesses are using AI to improve and perfect business operations,10 51% are turning toAI to help with cybersecurity and fraud management,11 47% harnessAI tools in the form of digital personal assistants,12 46% are using AI for customer relationship management13 and 40% are turning toAI for inventory management.14

AI’s capabilities enhance business functions to a whole other level with their task automations which allow them to handle routine tasks, as it frees up valuable human resources, for more strategic and creative endeavours.AI can take data driving decisions as it can process and analyse vast amounts of data, leading to more informed timely decisions. It operates effectively

4 Cole Stryker and Eda Kavlakoglu, 'What is artificial intelligence (AI)?' (IBM, 9 August 2024)< https://www.ibm.com/topics/artificial-intelligence > accessed 25April 2025.

5 Grand View Research, 'Artificial Intelligence Market Size, Share & Trends Analysis Report By Solution, By Technology (Deep Learning, Machine Learning, NLP, Machine Vision, GenerativeAI), By Function, By End-use, By Region, And Segment Forecasts, 2024 - 2030' (Grand View Research, 2024) <https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market >accessed 25 April 2025.

6 Anthony Cardillo, 'How Many Companies Use AI? (New Data)' (Exploding Topics, 26 February 2025) <https://explodingtopics.com/blog/companies-using-ai > accessed 25April 2025.

7 ibid.

8 Statista, 'Artificial intelligence (AI) in productivity and labor - statistics & facts' (Statista, 2024)< https://www.statista.com/topics/11516/artificial-intelligence-ai-in-labor-and-productivity/ > accessed 25 April 2025.

9 ibid.

10 Melissa Houston, 'How AI Is Changing The Game For Entrepreneurs In 2025 And Beyond' (Forbes, 8 February 2025) <https://www.forbes.com/sites/melissahouston/2025/02/08/how-ai-is-changing-the-game-for-entrepreneursin-2025-and-beyond/ > accessed 25April 2025.

11 ibid.

12 ibid.

13 ibid.

14 ibid.

and can significantly reduce costs and improve productivity. In areas such as found protection and cybersecurity, it can provide more robust real time protection improving risk management.15

II. Background on CSR and the DigitalAge

CDR and CSR are not separate from one another but rather they are interlinked, a subset of each other.16 Some even say an unavoidable extension.17 Both aim to minimize adverse effects while maximizing the benefits of an entity’s activity.18 As digital technologies become increasingly pervasive, incorporating CDR into CSR strategies ensures that companies address both traditional and digital responsibilities comprehensively.

1. Traditional Corporate Social Responsibility versus Corporate Digital Responsibility

A. Traditional Corporate Social Responsibility (CSR)

In the past, businesses primarily focused on one goal: maximizing profits.19 Over recent decades, however, many leaders have come to understand that companies have responsibilities that extend beyond financial gain.20 Businesses now need to consider their impact on people, the environment, and society as a whole.21 This shift in thinking is embodied in the concept of corporate social responsibility (CSR), which has led to the rise of businesses committed to social responsibility.22 While the specifics of CSR vary depending on a company’s mission and goals, it generally involves a form of self-regulation carried out through purposeful strategies and initiatives.23 Often, CSR is guided by the "triple bottom line," a principle that advises businesses to measure success by their impact on the "3 Ps": ''Profit, People, and Planet'', rather than financial performance alone.24

CSR is traditionally broken into 4 categories:

(a) Environmental Responsibility

15 Tony Zapanta, 'The impact of AI on business' (MicroSourcing, 21 August 2024) <https://www.microsourcing.com/learn/blog/the-impact-of-ai-onbusiness/#:~:text=AI%20could%20increase%20labor%20productivity,with%20cybersecurity%20and%20fraud%20 management > accessed 25April 2025.

16 Martin G Wynn and Peter Jones, ‘Corporate Responsibility in the Digital Era’ (2023) 14(6) Information 324 <https://doi.org/10.3390/info14060324> accessed 25April 2025.

17 Plateforme RSE, Corporate Digital Responsibility - Data: Key Issues (France Stratégie, 7 July 2020) <https://www.strategie.gouv.fr/en/publications/responsabilite-numerique-entreprises-plateforme-rse-publie-unpremier-avis-lenjeu> accessed 25April 2025.

18 Andreas B Eisingerich, Gaia Rubera, and Matthias Seifert, ‘Does Social Responsibility Help Protect a Company’s Reputation?’ (2011) MIT Sloan Management Review <https://sloanreview.mit.edu/article/does-social-responsibilityhelp-protect-a-companys-reputation/> accessed 25April 2025.

19 Harvard Business School Online, 'What Is Corporate Social Responsibility? 4 Types' (Harvard Business School Online, 2021)< https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility > accessed 25April 2025.

20 ibid.

21 ibid.

22 ibid.

23 ibid.

24 ibid.

The belief that businesses should be as environmentally friendly as possible.25

(b) Ethical Responsibility

Concerned with ensuring that companies operate fairly.26

(c) Philanthropic Responsibility

Business focuses on making the world better and improve society.27

(d) Economic Responsibility

The practice of companies routing financial decisions in commitment to do good.28

Engaging in CSR provides a range of advantages.29 CSR initiatives can strengthen a company’s brand, positioning it favourably with consumers, investors, and regulators.30 Additionally, CSR helps foster employee engagement and satisfaction and attracts job candidates who share the company’s values.31 Pursuing CSR also pushes leaders to scrutinize and improve aspects of their operations, such as hiring practices, sourcing, and value delivery.32 This reflection can result in more socially responsible actions that enable companies to tackle global challenges while achieving sustainable financial success.

33

B. Corporate Digital Responsibility (CDR)

CSR and CDR share the same overarching structure. However, CDR combines ethical digital transformation principles with responsible and more sustainable business practices.34 “Its focus is on minimizing the negative and maximizing the positive impacts of digitalization and digital tools have on people and the environment.”35

Schwartz & Carroll (2003) definite CDR as “set of shared values and norms guiding an organization’s operations with respect to the creation and operation of digital technology and data.” CDR emerged during the digital transformation era that took place after COVID-19,

25 ibid.

26 ibid.

27 ibid.

28 ibid.

29 ibid.

30 ibid.

31 ibid.

32 ibid.

33 ibid.

34 Tim Frick, 'What is Corporate Digital Responsibility?' (Mightybytes, 21 November 2024)< https://www.mightybytes.com/blog/what-is-corporate-digital-responsibility/ >accessed 25April 2025.

35 Dentons, 'What is corporate digital responsibility (CDR)?' (Dentons, 22 December 2022) https://www.dentons.com/en/insights/articles/2022/december/22/what-is-corporate-digitalresponsibility accessed 25April 2025.

which is also when the time we spent on our phones gradually increased to what is now an average of over 6 hours a day.36

There are three areas of CDR that have arisen as a sign that companies have started to analyse and implement ethical actions and values within their digital ecosystems and corporate culture.37

As a result, there have been 3 areas of development within CDR:

(a) Social Digital Responsibility

How companies use technology to deal with social issues such as equality, communications and rights protection.38

(b) Economic Digital Responsibility

The impact of technology and digital choices on economy.39

(c) Environmental Digital Responsibility

Concerns for the environment, such as in sustainability and how carbon footprint emissions can be limited.40

With these developing areas, a corporate concept is embedded to help decision makers further understand CDR. CSR ensures that businesses grow and innovate in ways that are socially equitable, economically beneficial, and environmentally sustainable. It enhances stakeholder trust, aligns companies with global sustainability goals, and positions them as leaders in ethical digital transformation.41

III. Key Ethical Issues in AI andAutomation for CSR

A. Algorithmic Bias

Bias in algorithms can lead to discrimination and other forms of inaccurate decision-making, possibly resulting in systematic and potentially harmful errors. Government officials are increasingly concerned thatAI could perpetuate or even worsen existing inequalities in society.42

36 Statista, 'Daily time spent using phones in the U.S. 2023, by generation' (Statista, 16 October 2024)< https://www.statista.com/statistics/1178640/daily-phone-screen-time-by-gen-us/ >accessed 25April 2025.

37 Karma Metrix, 'What is Corporate Digital Responsibility?' (Karma Metrix, 27 October 2022)< https://karmametrix.com/blog/web-sustainability/what-is-corporate-digital-responsibility/ > accessed 25 April 2025.

38 ibid.

39 ibid.

40 ibid.

41 Luciano Floridi, 'From Corporate Digital Responsibility to Responsible Digital Ecosystems' (2024) 16(12)Sustainability4972.<https://www.mdpi.com/2071-1050/16/12/4972>Accessed25April2025.

42 American Psychological Association, ‘Addressing equity and ethics in artificial intelligence’ (APA Monitor on Psychology, April 2024) <https://www.apa.org/monitor/2024/04/addressing-equity-ethics-artificial-intelligence> accessed 25April 2025.

Instances of biased algorithmic decision-making have been reported in several sectors, including healthcare, employment and criminal justice, among others.43

The root of this bias often lies in the inaccurate or unrepresentative data input into these systems, which fails to reflect the diverse populations the algorithms are meant to serve.44 Even if an algorithm is well-designed and theoretically objective, its application can still be unfair if the data it relies on is flawed.45 This creates situations where certain groups are unfairly disadvantaged, despite the technology's intended neutrality.46 The consequences of biased decision-making inAI systems can be severe, potentially amplifying societal inequities and deepening existing disparities.47 As a result, addressing algorithmic bias is essential to ensure thatAI contributes positively to society and does not reinforce harmful stereotypes or unequal treatment.48

B. Job Displacement

AsAI technologies rapidly transform the workforce, concerns about managing these changes fairly have become increasingly urgent.49 Automation's displacement of workers poses significant risks of exacerbating economic inequalities and disrupting lives, highlighting the need for responsible corporate practices.50 Many employees, particularly those in roles susceptible to automation, face an uncertain future, raising critical questions about the responsibilities of companies to support affected workers.51

To address these challenges, it is essential to implement comprehensive reskilling programmes that equip displaced workers with the skills necessary to thrive in a rapidly evolving job market.52 Additionally, robust regulatory frameworks must be established to ensure that businesses adoptAI technologies responsibly, balancing innovation with fairness.53 The creation

43 ibid.

44 ibid.

45 ibid.

46 ibid.

47 ibid.

48 ibid.

49 Fred Krimmelbein, ‘The Ethical Implications of AI and Job Displacement’ (Sogeti Labs, 3 October 2024) < �HYPERLINK "https://labs.sogeti.com/the-ethical-implications-of-ai-and-jobdisplacement/"https://labs.sogeti.com/the-ethical-implications-of-ai-and-job-displacement/ >accessed 25 April 2025.> accessed 25April 2025.

50 ibid.

51 ibid.

52 ibid.

53 ibid.

of new industries and opportunities will also be crucial in absorbing displaced workers, fostering economic growth, and mitigating social upheaval.54

Achieving these goals requires collaboration among companies, policymakers, and civil society to develop strategies that ensureAI-driven economic transformation benefits everyone.55 By working together, stakeholders can promote ethical standards in corporate practices, support vulnerable workers, and harness the potential ofAI to contribute to sustainable economic growth while minimizing its negative impacts on the workforce.56

C. Cybersecurity Risks

UsingAI comes with numerous risks and disadvantages, particularly in the realm of cybersecurity, where its implications are both complex and far-reaching. AI systems rely heavily on vast amounts of data to power their self-learning algorithms.57 This heavy dependence raises significant concerns about the potential for malicious actors to inject harmful content, compromise these systems, or even manipulate their outputs to suit malicious agendas.58 Such vulnerabilities may enable sophisticatedAI-powered phishing attacks or other forms of cybercrime, further exacerbating existing cybersecurity threats and creating new avenues for exploitation.59

Additionally,AI-driven cybersecurity tools often collect and process vast amounts of information from diverse sources, frequently including sensitive and confidential data.60 This concentration of valuable information makes these systems highly attractive targets for cybercriminals, increasing the risk of large-scale data breaches, ransomware attacks, and other cyber threats.61 Any compromise of these tools could have cascading effects, undermining the integrity of security frameworks across industries and organisations.62

Moreover, inherent challenges such asAI bias and a lack of transparency in decision-making processes introduce further complications. Bias in AI algorithms can result in unfair targeting or discrimination against specific users, sometimes disproportionately affecting marginalised groups.63 This can lead to the misidentification of individuals as insider threats or other false positives, causing serious reputational damage, emotional distress, and, in some cases,

54 ibid.

55 ibid.

56 ibid.

57 Palo Alto Networks, ‘What Are the Risks and Benefits of Artificial Intelligence (AI) in Cybersecurity?’ (Palo Alto Networks, 2024) <https://www.paloaltonetworks.com/cyberpedia/ai-risks-and-benefits-in-cybersecurity#risks> accessed 25April 2025.

58 ibid.

59 ibid.

60 ibid.

61 ibid.

62 ibid.

63 ibid.

irreparable harm to individuals and organisations alike.64 These issues highlight the need for robust oversight, ethical guidelines, and continuous innovation to mitigate the risks posed byAI in cybersecurity.65

D. Environmental Impact ofAI andAutomation

Unfortunately, the development ofAI is accompanied by significant environmental consequences, primarily due to its energy-intensive processes and the production of waste. TrainingAI models requires enormous amounts of computational power, which in turn demands substantial energy.66 This energy consumption contributes significantly to greenhouse gas emissions, thereby exacerbating climate change.67 The environmental impact does not end there; AI systems also produce large quantities of electronic waste (e-waste).68 This waste often contains hazardous materials such as lead, mercury, and cadmium, which pose serious risks to the environment and human health if not properly managed.69 These toxic substances can contaminate soil and water supplies, causing long-term ecological damage.

Moreover, the application ofAI technologies, such as delivery drones and automated agricultural practices, can disrupt natural ecosystems.70 These disruptions often result in biodiversity loss, soil contamination, and the promotion of monocultures.71 Monocultures - the agricultural practice of cultivating a single crop over a large area to maximise efficiency - can lead to various environmental issues.72 These include a reduction in biodiversity, depletion of soil nutrients, and increased vulnerability to pests and diseases, which in turn necessitate the extensive use of pesticides and fertilisers.73 Together, these factors illustrate the complex and multifaceted environmental challenges posed byAI development and application.74

IV. Legal and Regulatory Landscape:

In the European Union (EU), trying to integrate CSR into different businesses, companies, and =organisations has led to the development of various pieces of legislation, directives and regulations to monitor and try to ensure that these entities are abiding and upholding human rights and environmental standards throughout their practices.75 The Netherlands, as an EU

64 ibid.

65 ibid.

66 Alokya Kanungo, ‘The GreenDilemma: CanAI Fulfil Its PotentialWithout Harming theEnvironment?’(Earth.Org, 18 July 2023) <https://earth.org/the-green-dilemma-can-ai-fulfil-its-potential-without-harming-the-environment/> accessed 25April 2025.

67 ibid.

68 ibid.

69 ibid.

70 ibid.

71 ibid.

72 ibid.

73 ibid.

74 ibid.

75European Commission, ‘Corporate sustainability due diligence’ (European Commission, 25 July 2024) <https://commission.europa.eu/business-economy-euro/doing-business-eu/sustainability-due-diligence-responsiblebusiness/corporate-sustainability-due-diligence_en> accessed 25April 2025.

member state, has been rather proactive in implementing these directives, especially in regards to CSR and due diligence.76

The EU’s Directive 2024/1760 on Corporate Sustainability Due Diligence (CSDDD) mandates that companies identify, prevent, and mitigate adverse human rights and environmental impacts within their day-to-day operations.77 This has become an established practice intricated into these organizations to and maintain due diligence processes.78

A. CSDDD in the Netherlands

The Netherlands is one of the member states that has started to implement the CSDDD into its national law.79 According to the Proposal, the Dutch government aims to minimize administrative burdens, strictly including only the provisions necessary for compliance.80

The Dutch Proposal outlines several key obligations.81 Due diligence is one of the policies that companies must integrate into their r management systems through identification and assessment of the possible negative effects on human rights, the environment, the preventative measures for these possible impacts, a complaint procedure and an evaluation mechanism to view the effectiveness of the due diligence in place.82 Moreover, Dutch companies will need to adopt a climate transitions plan that demonstrates a step-by-step strategy on how their business models will align with the transition to a sustainable economy.83

The NetherlandsAuthority for Consumers and Markets (ACM) will serve as the supervisory authority, responsible for the monitoring of compliance within the organizations by issuing binding instructions, imposing orders subject to penalties, sanctions or fines as a result of noncompliance.84

B. Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive is a significant legislative measure enacted by the EU to enhance and standardize sustainability reporting among companies operating within its jurisdiction.85 The CSRD aims to enhance the quality and also the reliability of these

76 ibid.

77 ibid.

78 ibid.

79 Loyens & Loeff, ‘Publication of the Proposal of the Dutch Implementation of the Corporate Sustainability Due Diligence Directive (CSDDD)’(Loyens & Loeff, 27 November 2024) <https://www.loyensloeff.com/insights/news events/news/publication-of-the-proposal-of-the-dutch-implementation-of-the-corporate-sustainability-due-diligencedirective-csddd/> accessed 25April 2025.

80 ibid.

81 ibid.

82 ibid.

83 ibid.

84 ibid.

85 KPMG, ‘Corporate Sustainability Reporting Directive (CSRD)’ (KPMG) <https://kpmg.com/nl/en/home/topics/environmental-social-governance/corporate-sustainability-reportingdirective.html> accessed 25April 2025.

sustainability reports by making the reporting standards mandatory and easily accessible.86 There will be a focus on double materiality where entities not only must report on how they impact the environment, but also how sustainability related events affect them.87 This Directive is set to grown immensibly in the next year and eventually all operating businesses within the EU will be subject to this new style of reporting.88

CSRD is a learning process that has gotten entities in rethinking and reorganizing their operations internally by including upskilling workshops, increasing the role of the board in the organization, building stronger relationships through the value chain and integrating across functions.89 Yes, essentially this means more work for different organizations, but in practice it will greatly benefit not only the environemnet but the parties, namely the business and investors.90

V. Challenges and Limitations:

A. Financial Constraints

Implementing initiatives that are linked to AI practices can be costly and lead to a loss, it is rather demanding.91 Consequently, companies must spend a lot of their time and resources investing in new technologies, on staff training and possibly redesigning their internal structures, which for smaller enterprises can be rather straining.92

This is demonstrated through different practices, such as attempting to comply with the CSDDD, which requires extensive due diligence procedures. They often lead to not only financial investments but also to the need for advanced technical expertise.93

Furthermore, studies such as Bughin et al. (2018) show that those seeking to adoptAI into their daily activities will need to invest heavily in bias-mitigating technologies, data privacy and cybersecurity measures.94 Without proper funding, finding the means to afford all these new technologies protocols and/or measures will lead to the struggle to implement effective ethical strategies, risking non-compliance and reputational damage.95

86 ibid,

87 ibid.

88 ibid.

89 ibid.

90 ibid.

91 OECD, SMEs and Sustainability: Challenges and Opportunities (OECD 2022) <https://www.oecd.org/industry/smes/SME-sustainability-report.pdf > accessed 26April 2025.

92 ibid.

93 European Commission, Corporate Sustainability Due Diligence Directive (CSDDD): Questions and Answers (European Commission 2024) <https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_1145> accessed 26April 2025.

94 Jacques Bughin andothers, Notes from the AI Frontier: Applications and Value of Deep Learning (McKinsey Global Institute, 17 April 2018) <https://www.mckinsey.com/capabilities/quantumblack/our-insights/notes-from-the-aifrontier-applications-and-value-of-deep-learning> accessed 26April 2025.

95 ibid.

B. Measuring Impact

There are a few challenges that arise when attempting to establish a successful CSR initiative, especially those which surround the use ofAI.96 Traditional financial metrics are insufficient to capture the broader societal, ethical and environmental impacts expected today.97

It is difficult, subjective, and frequently lacks standardised criteria to measure algorithmic fairness, the environmental impact ofAI deployments, or the socioeconomic impact of job displacement98. By highlighting double materiality requiring businesses to report on how sustainability concerns affect them, as well as how they harm the environment and society frameworks such as the CSRD aim to solve this.99 However, it is still challenging to capture subtle elements like long-term ecological effects and digital ethics, which results in disparities among industries and regions.100

VI. Conclusion:

A. Future of CSR

The trajectory of CSR is closely linked to digital transformation and ongoing technological developments, which are compelling businesses to shift from conventional approaches to more holistic frameworks, such as Corporate Digital Responsibility (CDR).101 WithAI and automation becoming integral to corporate functions, ethical digital governance must now be a key component of broader CSR initiatives.102 CSR is no longer confined to charitable activities; rather, responsible corporate behaviour now hinges on ethical innovation, safeguarding data, transparent algorithms, and sustainable environmental practices.103

Moreover, regulatory developments like the EU’s Corporate Sustainability Reporting Directive (CSRD) are compelling organisations to enhance their disclosure practices, demonstrating not just financial performance, but also social and environmental impacts.104 The principle of double

96 Robert G Eccles and Svetlana Klimenko, ‘The Investor Revolution: Shareholders Are Getting Serious About Sustainability’ (2019) Harvard Business Review <https://hbr.org/2019/05/the-investor-revolution> accessed 26April 2025.

97 ibid.

98 European Parliament, ‘Corporate Sustainability: New Reporting RulesAdopted’(European Parliament Press Release, 2023) <https://www.europarl.europa.eu/news/en/press-room/20221104IPR49503/corporate-sustainabilitynew-reporting-rules-adopted> accessed 26April 2025.

99 ibid.

100 Dirk Matten and Jeremy Moon, ‘“Implicit” and “Explicit” CSR: A Conceptual Framework for a Comparative Understanding of Corporate Social Responsibility’ (1 April 2008) 33(2) Academy of Management Review 404 <https://journals.aom.org/doi/10.5465/amr.2008.31193458> accessed 26April 2025.

101 Luciano Floridi, ‘Establishing the Rules for the Digital Environment: The Example of the “Right to Be Forgotten”’ (2019) 32(3) Philosophy & Technology 507 <https://link.springer.com/article/10.1007/s13347-018-0321-6> accessed 26April 2025.

102 ibid.

103 ibid.

104 European Parliament, ‘Corporate Sustainability: New Reporting Rules Adopted’ (European Parliament Press Release, 4 November 2022) <https://www.europarl.europa.eu/news/en/press-room/20221104IPR49503/corporatesustainability-new-reporting-rules-adopted> accessed 26April 2025.

materiality now requires companies to assess not only how sustainability issues affect their operations but also how their activities influence society.105 Moving forward, CSR success will be measured not by PR efforts, but by tangible commitments to ethical digital practices, inclusive technological progress, and climate mitigation.106 Businesses that embed these values into their core strategies will not only meet regulatory demands but also gain a strategic edge in a global economy increasingly shaped by ethical considerations.107

B. Call to action

Businesses can’t just tick regulatory boxes anymore; they need to urgently step up as real ethical implementers in this fast-developing digital world. Waiting for laws to force change isn’t an option; we cannot simply attempt to catch up. Companies must take responsible innovation into their day-to-day from the very start.108 Boards have to take charge, ensuringAI ethics, algorithmic bias, cybersecurity, and sustainability aren’t afterthoughts but core parts of corporate strategy.109

However, this is not something companies can tackle independently. They will need to team up with governments, NGOs, and universities to shape fair rules and rebuild public ‘trust’.110 Joining initiatives like the UN Global Compact is not just good PR; it shows a real stake in global human rights and sustainability.111 Additionally, training teams at every level, from coders to sales, is key to making ethical digital practices stick.112

CSR is not a checklist; it should be a mindset and, frankly, a lifestyle for these organisations.113 Companies that get this, that priorities openness, fairness, and planet-friendly practices, won’t just do the right thing, but they will future-proof their business.114

105 ibid.

106 ibid.

107 ibid.

108 World Economic Forum, ‘Responsible Use of Technology: The Corporate Role’ (World Economic Forum White Paper, 2022) <> accessed 26 April 2025.https://www.weforum.org/whitepapers/responsible-use-of-technology-thecorporate-role> accessed 26April 2025.

109 ibid.

110 United Nations Global Compact, ‘Business Leadership in the Decade of Action’ (UN Global Compact, 2023) <> accessed 26April 2025https://www.unglobalcompact.org/take-action/leadership> accessed 26April 2025.

111 ibid.

112 ibid.

113 ibid.

114 ibid.

”The

Development of International Corporate Criminal Responsibility in International Criminal Justice and its limitations.”

Abstract

The increasing involvement of private actors, particularly transnational defence corporations, in armed conflicts has raised significant concerns about corporate responsibility concerning international crimes. While international criminal law traditionally holds only natural persons accountable for war crimes, crimes against humanity, and genocide, a significant accountability gap exists between natural persons and legal persons, such as corporations. This article explores the development of individual criminal liability within business activities, the evolution of international corporate criminal liability, and the arguments for including corporate criminal liability within the ICC framework. Evaluating whether incorporating corporate criminal liability into the Rome Statute could bridge the accountability gap between natural persons and legal persons, thereby enhancing corporate accountability for involvement in international crimes.

I.Introduction.

Over the past years, the involvement of private actors in armed conflicts has increased through for example, the exploitation ofscarce natural resources for commercialgain or thesupplyofweapons bytransnationaldefencecorporations.115 Forinstance,theStockholmInternationalPeaceResearch Institute’s (SIPRI) Arms Industry Database, reports that three corporations based in Israel (Elbit Systems, Israel Aerospace Industries, and Rafael) are among the hundred largest transnational corporations in theglobal defence industry116.In 2023 alone,these companies generatedUSD 13.6 billion in arms revenue, which was intrinsically connected to the armed conflict in Gaza,

115 Marie Davoise, 'Business, Armed Conflict, and Protection of the Environment: What Avenues for Corporate Accountability?' ( Goettingen Journal of International Law) 2020.

116 Stockholm International Peace Research Institute, ‘World’s Top Arms Producers See Revenues Rise on The Back of Wars and Regional Tensions’ (2 December 2024)<www.sipri.org/media/press-release/2024/worlds-top-armsproducers-see-revenues-rise-back-wars-and-regional-tensions> accessed 19 February 2025.

Palestine.117 This was the highest arms revenue ever recorded by any Israeli defence corporation in the SIPRI’sArms Industry database.118

On the 26 January 2024, the International Court of Justice (ICJ) in the South Africa v. Israel case found that the allegations of genocide against the state of Israel were plausible and ordered six provisional measures.119 Later that year on 19July 2024, the ICJ stated in its advisory opinion that states are under an obligation “not to render aid or assistance in maintaining the situation created by Israel’s illegal presence in the Occupied Palestinian Territory”.120 Despite this concerning background, all three Israeli companies saw a significant increase in arms revenue in the third quarter of 2024 compared to the same period in 2023. Elbit Systems reported a 24 per cent rise in arms revenue.121 IsraelAerospace Industries saw a 17 per cent increase in military sales.122 Rafael experienced a 31 per cent growth in overall sales.123 All three companies mention in their respective financial reports that their significant contribution to the Israeli war effort can explain the increase in sales.124 Given the risks of violating humanitarian law highlighted by the ICJ, one would expect arms revenues to decrease as companies take proactive steps to mitigate these risks through due diligence.

117 Stockholm International Peace Research Institute, ‘World’s Top Arms Producers See Revenues Rise on The Back of Wars and Regional Tensions’(2 December 2024)<www.sipri.org/media/press-release/2024/worlds-top-armsproducers-see-revenues-rise-back-wars-and-regional-tensions> accessed 19 February 2025.

118 Lorenzo Scarazzato, Dr Nan Tian, Dr Diego Lopes da Silva, Xiao Liang and Katarina Djokic, ‘The SIPRI Top 100 Arms-Producing and Military Services Companies, 2023’(2 December 2024)<www.sipri.org/visualizations/2024/sipri-top-100-arms-producing-and-military-services-companies-world2023> accessed 29 May 2025.

119 Application of the Convention on the Prevention and Punishment of the Crime of Genocide in the Gaza Strip (South Africa v Israel) [2024] ICJ Rep 192, para 86.

120 Legal Consequences Arising from the Policies and Practices of Israel in the Occupied Palestinian Territory, Including East Jerusalem (Advisory Opinion) <icj-cij.org/sites/default/files/case-related/186/186-20240719-adv-0100-en.pdf>[2024] ICJ Rep 186, para 279.

121 Elbit Systems, ‘ Elbit Systems Reports Third Quarter 2024 Results’(19 November 2024) <elbitsystems.com/prnew/elbit-systems-reports-third-quarter-2024-results/> accessed 19 February 2025.

122 Israel Aerospace Industries, ‘IAI Publishes its Financial Statements for Q3 2024’(20 November 2024)<www.iai.co.il/about/press-release/iai-publishes-its-financial-statements-q3-2024> accessed 19 February 2025.

123 Rafael, ‘RAFAEL Publishes its Financial Results for the 3rd Quarter of 2024’(5 December 2024) <www.rafael.co.il/news/rafael-financial-results-for-the-3rd-quarter-of-2024/> accessed 19 February 2025

124 Elbit Systems, ‘ Elbit Systems Reports Third Quarter 2024 Results’(19 November 2024) <elbitsystems.com/prnew/elbit-systems-reports-third-quarter-2024-results/> ; Israel Aerospace Industries, ‘IAI Publishes its Financial Statements for Q3 2024’(20 November 2024)<www.iai.co.il/about/press-release/iai-publishes-its-financialstatements-q3-2024> ; Rafael, ‘RAFAEL Publishes its Financial Results for the 3rd Quarter of 2024’(5 December 2024) <www.rafael.co.il/news/rafael-financial-results-for-the-3rd-quarter-of-2024/> accessed 19 February 2025.

International criminal law holds individuals criminally responsible for violations of international humanitarian and human rights law constituting war crimes, crimes against humanity, and genocide. Traditionally, international law assigns criminal liability solely to natural persons who commit, order, aid, abet, or otherwise assist in the commission of international crimes, as Article 25 of the Rome Statute of the International Criminal Court (ICC) specifies.125 While natural persons who aid, abet, or assist in the commission of international crimes through their business activities remain individually criminally responsible, the ICC does not hold legal persons responsible.126 As a result, a significant accountability gap persists between natural persons and legal persons within the ICC framework.127 Legal persons, such as the three aforementioned Israeli defence corporations, play a significant role in armed conflicts through their contributions to military efforts. However, the Rome Statute does not hold them to the same level of accountability as natural persons.

The prosecution of individuals before international tribunals for their role in international crimes committed during their business activities is well-established.128 Imposing criminal liability on corporations as legal persons, however, has proven to be controversial and, presently, remains outside the scope of the ICC framework.129 This article will explore the evolution of international corporate criminal liability and examine whether the Rome Statute should include corporate criminal liability.

The first part of the article focuses on the evolution of individual criminal liability for international crimes, highlighting how such liability can arise within the corporate context. Then the focus will shift to the development of international corporate criminal liability carried out by various international legal bodies. Finally, the arguments discussing adding corporate criminal liability

125 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25.

126 International Committee of the Red Cross, ‘International Humanitarian Law and the Challenges of Contemporary Armed Conflicts’( ICRC 2015) 82 (2020).

127 Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 <globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 19 February 2025.

128 Marie Davoise, 'Business, Armed Conflict, and Protection of the Environment: What Avenues for Corporate Accountability?' (Goettingen Journal of International Law) 2020.

129 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25 (1).

within the ICC framework are examined, evaluating whether corporate criminal liability could realistically bridge the accountability gap between natural persons and legal persons under the Rome Statute.

II.The Development of individual criminal liability for international crimes. in Business.

This section examines three key sources that illustrate how criminal liability for international crimes has either arisen or could arise for corporate officials. Firstly, an analysis of the IG Farben case that shows how the Nuremberg Trials imposed criminal liability on corporate officials.

Secondly, the Report of the International Commission of Jurists Expert Legal Panel on Corporate Complicity in International Crimes outlines types of corporate conduct that potentially trigger the individual criminal liability of corporate officials for international crimes. Finally, this section examines the relevant provisions under the Rome Statute to show how the ICC framework can hold corporate officials criminally liable.

A. The Prosecution of German Industrialists at the Nuremberg Trials.

1. Introduction.

The IG Farben case, prosecuted at the International Military Tribunal (IMT) in Nuremberg after the Second World War, represents the first attempt to hold individuals accountable for their corporate conduct under international criminal law.130 IG Farben was a German conglomerate of private chemical companiesthat manufactured and supplied Zyklon B gas, which the Nazi regime

130 Florian Jessberger, ‘On the Origins of Individual Criminal Responsibility under International Law for Business Activity: IG Farben on Trial’(2010) Volume 8 Issue 3 OxfordAcademic, 784 <On the Origins of Individual Criminal Responsibility under International Law for Business Activity | Journal of International Criminal Justice | Oxford Academic>(accessed 29 May 2025).

used in extermination camps across Europe.131 The IMT charged 24 members of IG Farben in leadership positions with planning and waging aggressive war, committing war crimes through the plunder of public and private property, committing crimes against humanity by enslaving and forcing civilians into labour, and participating in a conspiracy to commit crimes against peace.132 Thecourtconvicted13ofthedefendantsofwarcrimesandcrimesagainsthumanityforplundering foreign property and participating in the slave labour programme.133

2. War Crime of Plundering.

IG Farben plundered foreign property by taking over the control of local companies in Germanoccupied territories in violation of the 1907 Hague Convention on War and Land.134 The IMT found that criminal liability only arose for those defendants whose actions involved either “ordering, approving, authorising, or joining in the execution of a policy or act” amounting to the plunder of foreign private property and carrying out these actions “with adequate knowledge of those essential elements of the authorised act which give it its criminal character”.135 In light of these conditions, the IMTconcluded that eight defendants had sufficient control over the corporate conduct and knowledge to assign criminal liability, and found them guilty of the war crime of plundering.136

3. Crimes against Humanity and IG Farben’s Participation in the Slave Labour Programme.

131 United States v Carl Krauch et al. (IG Farben Case) Judgment of the Nuremberg International Military Tribunal 1946 (1947) 41AJIL 172, para 1085.

132 ibid, para 1081.

133 Florian Jessberger, ‘On the Origins of Individual Criminal Responsibility under International Law for Business Activity: IG Farben on Trial’(2010) Volume 8 Issue 3 OxfordAcademic, 788 <On the Origins of Individual Criminal Responsibility under International Law for Business Activity | Journal of International Criminal Justice | Oxford Academic>(accessed 29 May 2025).

134 ibid, 799.

135 United States v Carl Krauch et al. (IG Farben Case) Judgment of the Nuremberg International Military Tribunal 1946 (1947) 41AJIL 172, para 1156.

136 ibid, para 1167.

Imposing criminal liability on IG Farben members for the slave labour programme was not as straight-forward as imposing liability for previous charges. The charge related to the slave labour programme focused on three different elements: IG Farben’s supply of Zyklon B gas, IG Farben’s involvement in medical experiments on prisoners, and IG Farben’s use of forced labour.137

In relation to the supply of the Zyklon B gas, the IMT could not establish that the defendants had adequate “knowledge of the criminal purposes to which this substance was being put” and determined that “neither the volume of production nor the fact that large shipments were destined to concentration camps” alone was enough to infer the defendants’ knowledge.138 Similarly, the IMT failed to prove beyond a reasonable doubt that the defendants were aware of the criminal nature of the medical experiments that doctors conducted in concentration camps.139

The use of forced labour was the only element that led to a criminal conviction for some The defendants claimed the use of forced labour was due to necessity because of “compulsory production quotas imposed on them by the government agencies” and a refusal to meet these quotas would have resulted in “heavy penalties, including commitment to concentration camps and even death”.140 The IMTaccepted this defence only partially because under such coercion and compulsion, the defendants did not act “with that intent which is a necessary ingredient of every criminal offence”.141 However, the IMT found the defence of necessity did not apply to the defendants involved in the decision to construct a Zyklon B plant right next to the Auschwitz concentration camp.142 There was no governmental coercion inducing the selection of this particular construction site. Instead, the proximity to the concentration camp and access to cheap labour influenced the decision regarding the construction, rather than necessity.143

137 Florian Jessberger, ‘On the Origins of Individual Criminal Responsibility under International Law for Business Activity: IG Farben on Trial’(2010) Volume 8 Issue 3 OxfordAcademic, 791 <On the Origins of Individual Criminal Responsibility under International Law for Business Activity | Journal of International Criminal Justice | Oxford Academic>(accessed 29 May 2025).

138 United States v Carl Krauch et al. (IG Farben Case) Judgment of the Nuremberg International Military Tribunal 1946 (1947) 41AJIL 172, para 1168.

139 ibid, para 1168.

140 ibid, para 1174.

141 ibid, para 1174.

142 ibid, para 1185.

143 ibid, para 1189.

4. Conclusion.

The IG Farben case illustrates an attempt to impose criminal liability on corporate leaders who facilitated and profited from international crimes through their corporate structure. This case highlightsasignificantchallengewhenprovingthecriminal mens rea ofindividualsactingthrough a corporate structure. Neither the prosecution nor the defence disputed whether IG Farben made necessary contributions to Germany’s aggressive war, coercively took over many foreign companies, and used forced labour on a massive scale.144 However, attributing criminal responsibility to anindividual forthese acts proved legallychallenging, as theIMThadto establish beyond a reasonable doubt that the defendants were aware of the specific circumstances surrounding the crime.145 The IMT failed to accomplish this with the supply of Zyklon B gas despite the defendants’ awareness of an increased requirement for a toxic gas in concentration camps, where large numbers of people were imprisoned.

146

In a dissenting opinion, Judge Herbert argued that in light of the evidence presented, it would be more reasonable to find the defendants criminally liable based on them acting “in reckless disregard” of the consequences.147 Perhaps, this mode of liability could have enabled the IMT to bypass the challenge of proving each perpetrator’s knowledge of the precise circumstances surrounding the crimes.148

Despite these challenges, the IMT’s findings illustrate that criminal liability in the corporate context arises when a member of a corporation orders, approves, authorises or joins an act that amounts to an international crime and knows the criminal nature of the act. Additionally, the IMT

144 Florian Jessberger, ‘On the Origins of Individual Criminal Responsibility under International Law for Business Activity: IG Farben on Trial’(2010) Volume 8 Issue 3 OxfordAcademic, 795 <On the Origins of Individual Criminal Responsibility under International Law for Business Activity | Journal of International Criminal Justice | Oxford Academic>(accessed 29 May 2025).

145 ibid, 794.

146 ibid, 791.

147 ibid, 795.

148 ibid, 794.

accepted that the defence of necessity could excuse a perpetrator’s criminal conduct in the corporate context, however it is to be applied in a narrow manner. Therefore, the IMT reaffirmed that international criminal liability applies even if the corporate conduct complies with domestic law.

B. Report of the International Commission of Jurists (ICoJ) Expert Legal Panel on Corporate Complicity in International Crimes.

1. Introduction.

The IG Farben case, on one hand, illustrates how criminal liability arises in very specific circumstances.149 The ICoJ report, on the other hand, takes a broad approach by conducting a comparative analysis of international and national legal frameworks, case law, and decisions of international tribunals. Based on this analysis, the report broadly illustrates how corporate complicity in international crimes arises and in which instances it could trigger the individual criminal liability of corporate officials.150 The ICoJ establishes three types of corporate conduct that put a corporation and its officials in a “zone of legal risk”, leading to their criminal liability.151 This report focuses on situations where corporate officials may not be the principal offender of an international crime but still contribute to its commission by other actors.152

2. Different Types of Corporate Conduct in International Crimes.

The first type of complicit corporate conduct identified is enabling. This occurs when the corporation’s actions allow for international crimes to be committed.153 This means that without

149 United States v Carl Krauch et al. (IG Farben Case) Judgment of the Nuremberg International Military Tribunal 1946 (1947) 41AJIL 172.

150 International Commission of Jurists, Facing the Facts and Charting a Legal Path (1st vol, Corporate Complicity & Legal Accountability 2008) <www.icj.org/wp-content/uploads/2012/06/Vol.1-Corporate-legal-accountabilitythematic-report-2008.pdf> accessed 26 February 2025.

151 ibid, 3.

152 ibid, 8.

153 ibid, 9.

the corporation’s contribution to the commission of the crime, the principal perpetrator would not have been able to commit the crime.154

The second type of complicit corporate conduct identified is exacerbating. This occurs when the corporation’s conduct worsens the commission of international crimes.155 This includes situations where the principal perpetrator would have carried out the international crime regardless, but the corporate conduct had a significant harmful impact by raising either the number of crimes, the number of victims, or the severity of the harm they suffer.156

The last type of complicit corporate conduct identified is facilitating. This occurs when the corporation’s actions support the commission of international crimes.157 This covers cases where the principal perpetrator would have carried out the international crime anyway, but the corporate conduct has a “substantial effect”on the way that the crimes were carried out, either by facilitating or altering their execution.158

The supply of weapons to a warring party is a concrete example of a corporate conduct that could either enable, exacerbate, or facilitate the commission of international crimes by another actor.159

3. Establishing Criminal Liability for Complicit Corporate Conduct.

According to the ICoJ report, criminal liability for complicit corporate conduct can arise in two situations.First,whenitsofficialsactivelyintendtoenable,exacerbateorfacilitatethecommission of international crimes.160 In this case, the corporate officials share “the wish or desire to commit”

154 ibid, 11.

155 International Commission of Jurists, Facing the Facts and Charting a Legal Path (1st vol, Corporate Complicity & Legal Accountability 2008) <www.icj.org/wp-content/uploads/2012/06/Vol.1-Corporate-legal-accountabilitythematic-report-2008.pdf> accessed 26 February 2025.

156 ibid, 12.

157 ibid, 9.

158 ibid, 12.

159 ibid, 27.

160 ibid, 9.

international crimes with the principal actor.161 The officials of the corporation are then also considered the principal perpetrators of the offence, if the contribution to the crime is sufficient.

Criminal liability may also arise when its officials are aware of the risk that their corporate conduct is likely to have on the commission of international crimes.162 In such instances, international criminal law requires evidence that the corporation’s officials had the subjective knowledge that the corporate conduct would help the principal offender carry out the crime.163 International and national criminal courts will usually conduct an analysis of the facts to “determine whether the subjective knowledge of a corporation could be implied from the surrounding facts and circumstances”.164

4. Conclusion.

The ICoJ report clearly outlines specific types of complicit corporate conduct that could expose prima facie corporate officials to a zone of legal risk.165 It also describes the extent of knowledge and intent required for criminal liability to arise for its corporate officials.166 The report sets out the guiding principles for corporations to avoid exposing their corporate officials to this zone of legal risk.167 However, it does not delve into the details of how a specific national or international court determines a corporate official’s guilt. Instead, it broadly depicts situations that warrant an investigation into a corporate official’s criminal liability. Furthermore, the ICoJ report’s findings on the knowledge and intent required for corporate officials’ criminal liability are based on a comparative perspective, meaning they do not accurately reflect the intent and knowledge requirements within all legal frameworks worldwide.

C. The Prospect of Prosecuting Corporate Officials at the ICC.

161 ibid, 19.

162 International Commission of Jurists, Facing the Facts and Charting a Legal Path (1st vol, Corporate Complicity & Legal Accountability 2008) <www.icj.org/wp-content/uploads/2012/06/Vol.1-Corporate-legal-accountabilitythematic-report-2008.pdf> accessed 26 February 2025.

163 ibid, 20.

164 ibid, 21.

165 ibid, 8.

166 ibid,19.

167 ibid, 8.

1. Introduction.

The ICC has yet to prosecute corporate officials for the commission of international crimes, even though the Rome Statute allows for such prosecutions.168 As highlighted in the ICoJ report, complicit corporate conduct may place corporate officials in a zone of legal risk, exposing them to liability under the Rome Statute. If liable, a corporate official will then be individually criminally responsible for the criminal conduct of the corporation underArticle 25(3)(c) of the Rome Statute, if the mental element outlined inArticle 30 of the Rome Statute is satisfied.169 Corporate officials may be criminally liable under other sections of Article 25, but aiding and abetting under article 25(3)(c) remains the most relevant mode of liability if the ICC were to prosecute them.170

2. Aiding and Abetting in the Commission of International Crimes: Corporate Official’s Liability.

The Rome Statute imposes liability for a crime when an individual “aids, abets or otherwise assists in [the] commission … [of a crime]”.171 If the purpose of the individual’s assistance is to facilitate the crime then the acts constitute aiding and abetting.172 Alternatively, if the assistance “furthered, advanced, or facilitated the commission of such offence”, it also qualifies as aiding and abetting.173 Although causality is not a formal requirement in Article 25 of the Rome Statute, a causal link between the corporate official’s assistance and the crime qualifies the act as aiding and abetting under the Rome Statute, without needing to examine the purpose behind the act.174 For example,

168 Julia Graff, ‘Corporate War Criminals and the International Criminal Court: Blood and Profits in the Democratic Republic of Congo’(2004) 11(2) Human Rights Brief 23.

169 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25(3)(c).

170 Caspar Plomp, ‘Aiding andAbetting: The Responsibility of Business Leaders under the Rome Statute of the International Criminal Court’(2014) 30(79) Utrecht Journal of International and European Law 4.

171 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25(3)(c).

172 ibid.

173 The Prosecutor v. Jean-Pierre Bemba Gombo, Aimé Kilolo Musamba, Jean-Jacques Mangenda Kabongo, Fidèle Babala Wandu and Narcisse Arido. (Judgment) ICC-01/05-01/13 (19 October 2016) [94].

174 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25(3)(c).

if a corporation supplies weapons which are used in the commission of international crimes, it could be considered as aiding and abetting.175 This would trigger the criminal responsibility of its corporate officials, if the supply of weapons was intended to facilitate the crime or if it facilitated the commission of the crime.176

3. Article 30 of the Rome Statute: The Mental Element inAiding andAbetting.

For individual criminal responsibility to arise, the corporate official’s criminal conduct must be accompaniedbytheintentandknowledgerequiredbytheRomeStatuteunderArticle30.177 Article 30 states that a person has the necessary intent if either they mean to engage in criminal conduct, mean to cause criminal consequences, or are aware that the consequence will occur in the ordinary course of events.178 Criminal consequence refers to offences in which the material element is defined by the result rather than the conduct itself, for example, the crime against humanity of murder under article 7(1)(a) of the Rome Statute, which requires the actual consequence of a person's death to constitute the crime.179 For the knowledge-requirement, Article 30 requires that the corporate official is aware that circumstances exist or that a consequence will occur.180 The ICoJ highlights the difficulty of satisfying the requirements inArticle 30, when it concerns aiding and abetting.181 Legal Scholar Kyriakakis in her article argues that “the notion of aiding and abetting [is] largely inapplicable” to corporate officials who are usually motivated “by the purpose of personal profit”, in contrast to the requirement of intent and knowledge underArticle 30.182

175 International Commission of Jurists, Criminal Law and International Crimes (2nd vol, Corporate Complicity & Legal Accountability 2008) 19 <www.icj.org/wp-content/uploads/2012/06/Vol.2-Corporate-legal-accountabilitythematic-report-2008.pdf> accessed 26 February 2025.

176 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 25(3)(c).

177 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 30.

178 ibid, art 30(2)(a); art 30(2)(b).

179 William A. Schabas, Article 30. Mental Element/Élément Psychologique, in Commentary on the Rome Statute of the International Criminal Court (Oxford University Press 2010) 473 <www.ucis.pitt.edu/global/sites/default/files/Source%204B_%20Schabas%20on%20Article%2030.pdf> accessed 29 May 2025.

180 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art 30(3).

181 International Commission of Jurists, Criminal Law and International Crimes (2nd vol, Corporate Complicity & Legal Accountability 2008) 19 <www.icj.org/wp-content/uploads/2012/06/Vol.2-Corporate-legal-accountabilitythematic-report-2008.pdf> accessed 26 February 2025.

182 Joanna Kyriakakis, ‘Developments in International Criminal Law and the Case of Business Involvement in International Crimes’(2012) 94(887) International Review of the Red Cross 981, 998.

4. Conclusion.

The prosecution of corporate officials at the ICC remains a legal fiction. However, corporate officials have successfully been prosecuted for international crimes in national courts, as demonstrated in cases like Public Prosecutor v. Van Anraat, where a Dutch criminal court convicted a business executive of war crimes for supplying substances used in Saddam Hussein’s chemical weapons programme.183 This highlights the principle of complementarity under the Rome Statute, where the ICC will only intervene when national courts are unwilling or unable to prosecuteinternationalcrimes.184 Nationalcourts,therefore,serveastheprimaryvenueforholding corporate officials accountable for international crimes Especially since corporate liability for international crimes committed by corporate officials within domestic legal systems is more developed than in the ICC framework.185

Despite this avenue, it is argued that the ICC should take greater steps to respond to international crimes committed in the corporate context.186 Some legal scholars advocate for broadening “the meaning of individual criminal liability and the definition of a ‘person’ … to include corporate entities”, because of the difficulty to attribute individual criminal responsibility to corporate officials for the corporation’s conduct within the ICC framework.187 This expansion would enable the ICC to pursue corporate accountability more effectively.

III.The Development of International Corporate Criminal Liability.

183 Public Prosecutor v. Van Anraat (23 december 2005) The Hague District Court, LJNAX6406.

184 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), preamble; art 17.

185 Jaya Élise Bordeleau-Cass, ‘The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 <globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 19 February 2025.

186 ibid.

187 ibid.

Several states have already incorporated various forms of criminal corporate liability into their domestic legal systems.188 For example, Section 51(1) of the Dutch Criminal Code states that “criminal offences can be committed by natural persons and legal persons”.189 Corporate liability in international criminal law remains underdeveloped,190 but there are significant instances where international criminal law has either addressed or tried to overcome the accountability gap for crimes committed by corporations.191

D. The Findings of the Special Tribunal for Lebanon (STL) in the Al-Jadeed case.

The appeals chamber of the STL in 2014 maintained the trial chambers’ decision to hold a corporation liable for the crime of contempt of court,and recognised that the STLhad jurisdiction over legal persons.192 To reach this conclusion, the appeals chamber surveyed trends of corporate liability in international law and in the domestic laws of several states, including Lebanon, and concluded that there was an emergence of “shared international understanding on the need to address corporate responsibility”.193 In the view of the appeals chamber, this development allowed the STL to “interpret the term ‘person’to include legal entities”.194

The Al-Jadeed case marks the first instance in which a hybrid criminal tribunal held a corporation criminally liable.195 Many legal scholars concur that this decision holds great significance, as it has the potential to extend “beyond the narrow mandate of the STL to set an important precedent for

188 Jaya Élise Bordeleau-Cass, ‘The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 <globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 19 February 2025.

189 Wetboek van Strafrecht (Dutch Criminal Code) s. 51(1).

190 Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 <globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 28 February 2025.

191 ibid.

192 The Prosecutor v. New TV S.A.L Karma Mohamed Tahsin Al Khayat (Decision on InterlocutoryAppeal Concerning Personal Jurisdiction in Contempt Proceedings) STL-14-05/PT/AP/AR126.1 ( 2 October 2014) para 59.

193 ibid, para 46.

194 ibid, para 59.

195 Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 <globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 28 February 2025.

international criminal law”.196 If member states amended Article 25 of the Rome Statute, the AlJadeed case would support the inclusion of legal persons within the ICC’s personal jurisdiction.

E. TheAfrican Union’s (AU)Adoption of the Malabo Protocol.

The AU adopted the Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human rights (Malabo Protocol) in 2014.197 One objective of the Malabo Protocol is to grant theAfrican Court of Justice and Human Rights (ACJHR) the authority to prosecute 14 distinct crimes outlined in the protocol, including genocide, crimes against humanity, and war crimes.198 The Malabo Protocol comes into force 30 sdays after being ratified by 15 AU member states.199 However, as of 2025, only 15 AU members have signed the protocol, and none have ratified it yet.200

Article46C oftheMalaboProtocol grants theACJHR jurisdictionoverlegal persons,andspecifies the intent and knowledge necessary for corporate criminal liability to arise.201 According to article 46C, the intention of a corporation to commit an offence “may be established by proof it was the policy of the corporation to do the act which constituted the offence”.202 It provides that a corporation can be deemed to have knowledge of an offense if it is shown that the necessary information was actually or constructively known within the corporation, even if that information is dispersed among different employees.203 Furthermore, it clarifies that holding the corporation

196 ibid.

197 TheAfrican Union (TheAssembly of Heads of State and Government) ‘ Protocol onAmendments to the Protocol on the Statute of theAfrican Court of Justice and Human Rights’(Malabo 2014).

198 ibid, art 28A.

199 ibid, art 11.

200 African Union, ‘Ratification status: Protocol on theAmendments to the Protocol on the Statute of theAfrican Court of Justice and Human rights’ (2014) <au.int/sites/default/files/treaties/36398-slPROTOCOL%20ON%20AMENDMENTS%20TO%20THE%20PROTOCOL%20ON%20THE%20STATUTE%20 OF%20THE%20AFRICAN%20COURT%20OF%20JUSTICE%20AND%20HUMAN%20RIGHTS.pdf> accessed 1 March 2025.

201 TheAfrican Union (TheAssembly of Heads of State and Government) ‘ Protocol onAmendments to the Protocol on the Statute of theAfrican Court of Justice and Human Rights’(Malabo 2014), art 46C (1)(2)(4).

202 ibid, art 46C (2).

203 TheAfrican Union (TheAssembly of Heads of State and Government) ‘ Protocol onAmendments to the Protocol on the Statute of theAfrican Court of Justice and Human Rights’(Malabo 2014), art 46C (4).

criminally responsible does not prevent its corporate personnel from also being held criminally liable for the same offences.204

Since the Malabo Protocol is not yet operative, there is no case law demonstrating the application of article 46C to corporations complicit in international crimes. However, if the Malabo Protocol were to enter into force, theACJHR would become the first criminal court capable of prosecuting corporations forinternational crimes committedwithin theterritories ofstateparties.205 Regardless of whether the Malabo Protocol becomes legally binding, article 46C provides guidance for the potential inclusion of corporate criminal liability within the ICC framework.206

IV.Corporate Criminal Liability within the ICC framework:Arguments For andAgainst.

F. Arguments in Favour.

Some legal scholars argue that corporate criminal liability should be incorporated into the ICC framework, as corporations often possess more economic power and resources than individuals.207 Thus, corporations are more capable of perpetrating international crimes.208 This argument stems from the ICC’s focus on the most serious international crimes.209 Corporations, particularly thosein thedefenceindustry,aremore likely thanindividualnatural personsto possess the means to commit such crimes 210

204 ibid, art 46C (6).

205 Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 < https://globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 28 February 2025.

206 ibid.

207 Caspar Plomp, 'Aiding and Abetting: The Responsibility of Business Leaders under the Rome Statute of the International Criminal Court' (Utrecht Journal of International and European Law Vol 30 Issue 79 2014) 4-29.

208 ibid.

209 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002) 2187 UNTS 3, preamble.

210Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 < https://globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 28 February 2025.

Itisarguedthatincluding corporatecriminalliabilitywithintheICC frameworkpreventscorporate officials from evading criminal responsibility for their actions by concealing themselves behind the corporation’s structure.211 This is particularly important as corporations often structure themselves to shield employees from liability.212 Instead of trying to attribute guilt to an individual corporate official, corporate criminal liability would nonetheless ensure accountability for international crimes by holding the corporation itself liable.

Another argument frequently raised by legal scholars is that corporate criminal liability under the ICC framework could have a deterrent effect on corporations.213 Corporations would likely give greater consideration to humanitarian law when conducting their business if they faced potential liability under international criminal law.214

Finally, an argument commonly raised by legal scholars is based on the assumption that the appropriate form of punishment would involve fines or economic sanctions imposed on corporations.215 On the basis of this premise, legal scholars argue it would help facilitate victims’ access to reparations for international crimes in which the corporation was involved.216

G. ArgumentsAgainst.

The inclusion of corporate criminal liability was first considered during the negotiations of the Rome Statute in 1998.217 However, it was ultimately rejected on the basis of “an insufficient number of national jurisdictions that held corporations liable under criminal law.”218 Allowing the ICC to criminally pursue legal persons when national jurisdictions are unable to do so, would

211 Caspar Plomp, 'Aiding and Abetting: The Responsibility of Business Leaders under the Rome Statute of the International Criminal Court' (Utrecht Journal of International and European Law Vol 30 Issue 79 2014) 4-29.

212 ibid.

213 ibid.

214 ibid.

215 ibid.

216 Mordechai Kremnitzer,‘APossible Case for Imposing Criminal Liability on Corporations in International Criminal Law’(8 J Int'l Crim Just 909 2010) 915.

217 David J. Scheffer, ‘Corporate Liability under the Rome Statute’( 57 HILJ 36 2016) 38.

218 ibid.

cripple the principle of complementarity dependent on “compatible criminal law in state party jurisdictions”.219 Since the ICC’s jurisdiction is based on this principle, where state parties bear the primary responsibility for prosecution, enabling the ICC to act in the absence of domestic corporate liability extends its role beyond its intended subsidiary function.220Although many state parties to the Rome Statute now recognise corporate criminal liability in their national law, the argument raised during the 1998 negotiations remains pertinent.221Aconflict with the principle of complementarity persists for those state parties that have not incorporated such liability into their domestic legal systems.222 This ongoing inconsistency among state parties underscores the argumentpreviouslyraisedagainsttheincorporationofcorporatecriminalliabilityduringthe1998 negotiations, as it still risks undermining the fundamental principle of complementarity on which the ICC’s jurisdiction depends upon.

Another argument raised against the inclusion of corporate criminal liability within the ICC framework points out that there is “no universal standard of attribution of liability for corporations under international law”.223 Although the Al-Jadeed case and article 46C of the Malabo Protocol offer some guidance on attributing criminal liability to corporations, corporate criminal liability is far more advanced at the domestic level than at the international level.224 Rather than advocating for the inclusion of corporate criminal liability within the ICC framework, it is argued that the focus should be on “expanding corporate liability for international crimes within domestic laws”,225 as domestic systems are already better equipped to address corporate criminal liability than the ICC.

219 ibid.

220 David J. Scheffer, ‘Brief of Ambassador David J. Scheffer, Northwestern University Pritzker School of Law, as Amicus Curiae in Support of the Petitioners, Joseph Jesner, et al., v, Arab Bank, PLC’ (2017) 9 <https://www.scotusblog.com/wp-content/uploads/2017/07/16-499-tsac-david-j-scheffer.pdf> accessed 28 April 2025.

221 David J. Scheffer, ‘Corporate Liability under the Rome Statute’( 57 HILJ 36 2016) 38.

222 ibid.

223 Jaya Élise Bordeleau-Cass, ‘ The ‘Accountability Gap’: Holding Corporations Liable for International Crimes’ (2019) 3 PKI Global Justice Journal 65 < https://globaljustice.queenslaw.ca/news/the-accountability-gap-holdingcorporations-liable-for-international-crimes> accessed 28 February 2025.

224 Ibid.

225 ibid.

The next argument put forward by legal scholars is a practical one. The inclusion of corporate criminal liability in theACJHR has not been successful so far,226 as it relies on the willingness of AU member states to ratify the Malabo protocol. In the same way, the inclusion of corporate criminal liability within the ICC framework would depend on the willingness of states parties to amend the Rome Statute. Due to the interdependence of states and corporations, it is argued that states are unlikely to include corporate criminal liability within the ICC framework.227 This practical argument is further supported by the inability to incorporate corporate criminal liability within theACJHR framework.

H. Conclusion.

After weighing the arguments in favour of and against the inclusion of corporate criminal liability within the ICC framework, there are compelling reasons to support such a development. Corporations, unlike individuals, often possess significantly more resources and have a greater capacity to commit serious international crimes. The need to prevent corporate officials from evading criminal responsibility makes the incorporation of corporate criminal liability within the ICC framework an important step towards ensuring corporate accountability. Furthermore, corporate criminal liability could serve as a strong deterrent and facilitate reparations for victims.

Despite these arguments, the inclusion of corporate criminal liability within the ICC framework appears to be unfeasible.The lack of a universal standard for corporate liability under international law, paired with the interdependence between states and corporations and the challenges the ACJHR faced in attempting to include corporate criminal liability, suggests that such an initiative is unlikely to succeed. Moreover, the principle of complementarity poses a structural barrier: while manystateparties nowrecognisecorporatecriminal liability domestically,others state parties have

226 African Union, ‘Ratification status: Protocol on theAmendments to the Protocol on the Statute of theAfrican Court of Justice and Human rights’ (2014) <au.int/sites/default/files/treaties/36398-slPROTOCOL%20ON%20AMENDMENTS%20TO%20THE%20PROTOCOL%20ON%20THE%20STATUTE%20 OF%20THE%20AFRICAN%20COURT%20OF%20JUSTICE%20AND%20HUMAN%20RIGHTS.pdf> accessed 1 March 2025.

227 Babic, M., Fichtner, J., & Heemskerk, E.M, ‘States versus Corporations: Rethinking the Power of Business in international Politics’ The International Spectator: Italian Journal of International affairs 52 4, 22 <pure.uva.nl/ws/files/25531999/6_14_2018_States_ver.pdf> accessed 2 March 2025.

not, which risks undermining the ICC’s ability to function within its intended subsidiary role. While the idea holds merit, domestic legal frameworks remain better suited to address corporate criminal liability and will probably play a more significant role in achieving corporate accountability than the ICC will.

V.Concluding Remarks.

The examination of individual liability for corporate officials underscores the difficulty of attributing guilt for corporate actions that contribute to the commission of international crimes, particularly under the Rome Statute To address this challenge within the ICC framework, legal experts have suggested introducing corporate criminal liability as a basis for prosecution However, imposing criminal liability on corporations comes with its own challenges.This is partly because of the underdevelopment of universal standards for attributing corporate liability, despite the advancements made by the Special Tribunal for Lebanon and the African Union.228 Without a universally established standard for attributing corporate liability under international law, the ICC framework is unlikely to include corporate criminal liability.

Furthermore, the principle of complementarity presents a structural barrier to the inclusion of corporate criminal liability within the ICC framework. Given that the ICC’s jurisdiction is subsidiary to that of state parties, it can only intervene when national courts are either unwilling or unable to prosecute international crimes.229 This places significant emphasis on domestic legal frameworks, which, at present, are the most viable avenue for holding both corporations and corporate officials accountable for international crimes. Additionally, states, given their interconnectedness with corporations, would likely be resistant to supporting the inclusion of corporate criminal liability within the ICC framework. Consequently, the principle of

228 TheAfrican Union (TheAssembly of Heads of State and Government) ‘ Protocol onAmendments to the Protocol on the Statute of the African Court of Justice and Human Rights’ (Malabo 2014) ; The Prosecutor v. New TV S.A.L Karma Mohamed Tahsin Al Khayat (Decision on InterlocutoryAppeal Concerning Personal Jurisdiction in Contempt Proceedings) STL-14-05/PT/AP/AR126.1 ( 2 October 2014).

229 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002), art. 17(a).

complementarity reinforces the reliance on national legal systems to address corporate complicity in international crimes, rather than on the ICC.

However, returning to the three transnational defence corporations based in Israel presented in the introduction, it seems highly unlikely that relying on the State of Israel to investigate these corporations’ involvement in international crimes would result in any corporate accountability. Especially when considering that the ICC has already issued two arrest warrants against the Prime Minister of Israel, Benjamin Netanyahu, and against the former minister of defence of Israel,Yoav Gallant for war crimes and crimes against humanity.230 Corporate criminal liability within the ICC framework would have allowed the Court to investigate whether Elbit Systems, Israel Aerospace Industries, and Rafael enabled, exacerbated, or facilitated the commission of international crimes of which Benjamin Netanyahu andYoav Galant are accused. The ICC’s inability to investigate the potentially complicit conduct of these three transnational corporations underscores the urgent need for significant advancements in international criminal law to ensure corporate accountability for international crimes, particularly when domestic legal frameworks fail to do so.

230 International Criminal Court, ‘Situation in the State of Palestine: ICC Pre-Trial Chamber I rejects the State of Israel’s Challenges to Jurisdictions and Issues Warrants of Arrest For Benjamin Netanyahu and Yoav Gallant’(2024) Press Release <https://www.icc-cpi.int/news/situation-state-palestine-icc-pre-trial-chamber-i-rejects-state-israelschallenges> accessed 2 March 2025.

”Corporate

Sustainability Due Diligence Directive: Development,Application and Criticism.”

Abstract:

The growth of transnational corporations has been a driving force behind global development, but it has often been accompanied by environmental harm and human rights violations. In response to this, the European Union has introduced the Corporate Sustainability Due Diligence Directive 2024/1760 (CSDDD), designed to regulate corporate behaviour in these critical areas. This article provides an overview of the Directive, focusing on its material and personal scope, as well as the obligations imposed on companies. It also examines the enforcement mechanisms available in the event of non-compliance. Finally, the article addresses various criticisms that have emerged, particularly concerns regarding the scope and applicability of the Directive.

I. Introduction

Almost one in ten children worldwide are involved in child labour, with over half involved in dangerous work, directly threatening their health and safety.231 Greenhouse gas emissions reached record levels in 2023, significantly impacting global well-being.232 Amajor driver of both of those issues? The conduct of modern corporations, which often prioritize profit over the protection of human and environmental rights.233

To address these challenges, international bodies have been working to impose limitations on corporate activities. On 25 July 2024, the European Union has implemented the Directive on Corporate Sustainability Due Diligence (CSDDD).234 It is a Directive aiming at fostering

231 International Labour Office and United Nations Children’s Fund, “Child Labour: Global estimates 2020, trends and the road forward” (ILO and UNICEF 2021) <https://www.ilo.org/publications/major-publications/child-labourglobal-estimates-2020-trends-and-road-forward> accessed 4 December 2024.

232 World Meteorological Organization, “State of the Climate 2024 Update” (WMO, 2024) <https://library.wmo.int/viewer/69075/download?file=State-Climate-2024-UpdateCOP29_en.pdf&type=pdf&navigator=1> accessed 4 December 2024.

233 David R Boyd and Stephanie Keene, Essential Elements of Effective and Equitable Human Rights and Environmental Due Diligence Legislation: Policy Brief No. 3 (UN Special Rapporteur on Human Rights and the Environment, June 2022).

234 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42.

sustainable and responsible corporate behaviour in companies’ operations and across their global value chains.235

a. The goal of the Directive

The main goal of the CSDDD is to encourage behaviour in companies’ operations, by imposing obligations for companies regarding potential human rights violations and environmental impacts.236 Additionally, the Directive seeks to harmonize rules across EU Member States to avoid regulatory fragmentation, promote legal certainty, and ensure a level playing field for businesses and stakeholders in the single market. 237

The Directive also aims to strengthen corporate accountability for adverse impacts and to ensure access to remedies for those whose human and environmental rights have been violated.238 Notably, it extends these obligations beyond the companies themselves to their entire value chains.239 By doing so, it contributes to the EU's broader objectives under the European Green Deal and the United Nations (UN) Sustainable Development Goals (SDGs), paving the way for a climate-neutral and green economy.240

b. Complementary legislations

The CSDDD builds on a foundation of existing international frameworks aimed at addressing corporate accountability for human rights and environmental protection.241 First, in 2011, the United Nations Human Rights Council has published UN Guiding Principles on Business and Human Rights (UNGP).242 It established responsibilities of businesses, regardless of size, to

235 ibid art 1(1).

236 ibid.

237 ibid art 4.

238 ibid art 12.

239 ibid art 1.

240 European Commission, “European Green Deal: Striving to be the first climate-neutral continent” <https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en> accessed 5 December 2024 and European Commission, “Sustainable Development Goals” (European CommissionInternational Partnerships, 2024) <https://international-partnerships.ec.europa.eu/policies/sustainable-developmentgoals_en> accessed 2 June 2025.

241 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, recitals 5-6.

242 United Nations Human Rights Council, “Guiding Principles on Business and Human Rights: Implementing the United Nations "Protect, Respect and Remedy" Framework” (2011) UN DocA/HRC/17/31.

prevent and address adverse impacts on human rights.243 Yet, the UNGP lacks binding obligations or enforcement mechanisms, making it a soft law instrument.244 Similarly, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, updated in 2023, offered recommendations across a wide range of issues, including human rights, labour conditions, and environmental practices, but these too are non-binding, leaving compliance to corporate discretion.245

Recognizing these limitations, the UN has been working through the Open-Ended Intergovernmental Working Group on Business and Human Rights (OEIWG), to create a legally binding instrument that would enforce corporate due diligence obligations globally, yet the final agreement is yet to be achieved.246

c. Corporate Sustainability Reporting Directive

One cannot discuss the CSDDD without first mentioning its predecessor: the Corporate Sustainability Reporting Directive (CSRD), which came into force on 5 January 2023.247 This directive primarily benefits investors who prioritize sustainability, enabling them to make more informed decisions about where to allocate their capital.Access to standardized and verifiable data also allowstheseinvestors to better assess potential risks associated with “green” investments.The CSRD requires companies to disclose detailed information about their environmental and social performance, replacing the earlier Non-Financial Reporting Directive (NFRD).248 While the NFRD also mandated certain disclosures, its requirements were broader and less specific than those introduced under the CSRD, as CSRD not only expands the number of companies subject to sustainability reporting but also introduces more rigorous standards.249 Reports must now comply

243 ibid art 11.

244 ibid art 25.

245Organisation for Economic Co-operation and Development, “OECD Guidelines for Multinational Enterprises” (2011 edn, OECD Publishing 2011).

246 UNGA“Report of the Open Working Group of the GeneralAssembly on Sustainable Development Goals” (12 August 2014) UN DocA/68/970.

247 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 (Corporate Sustainability Reporting Directive).

248 ibid, recitals 1.

249 ibid art 19a.

with the European Sustainability Reporting Standards (ESRS) and are subject to mandatory assurance audits to verify the accuracy of the data provided.250

A key distinction between the CSRD and the CSDDD lies in the timeline and scope of adoption. While some companies already subject to CSRD obligations have voluntarily begun publishing their sustainability reports, consistent access to comprehensive and high-quality reports remains limited and will take time to materialize.251

d. Reason for implementation

Since there is already a number of instruments addressing due diligence, why is there a need for yet another instrument? As mentioned before, the OECD’s Guidelines and UNGP are soft law instruments, that do not create any legally binding obligations on parties.252 The research from the European Commission has indicated that voluntary action is insufficient and did not result in large scale improvement across industries.253 Certain EU companies have been associated with adverse human rights and environmental impacts, including in their value chains.254 Some violations have occurred regarding forced labour, child labour and greenhouse gas emissions and ecosystem degradation.255

Before the implementation of the CSDDD, several Member States, including France and the Netherlands, had already incorporated due diligence obligations into their national legal frameworks.256 These states strongly advocated for harmonizing due diligence rules across the EU,

250 ibid art 29.

251 Look e.g. EFRAG, Implementation of ESRS: Initial Observed Practices from Selected Companies (July 2024) <https://www.efrag.org/sites/default/files/media/document/202407/EFRAG_ESRS%20initial%20observed%20practices%20Q2%202024%20final%20version.pdf> accessed 29 April 2025.

252 Organisation for Economic Co-operation and Development, “OECD Guidelines for Multinational Enterprises” (2011 edn, OECD Publishing 2011) page 58.

253 European Commission, Directorate-General for Justice and Consumers, Torres-Cortés F, Salinier C, Deringer H, Bright C and others, “Study on Due Diligence Requirements Through the Supply Chain- Final Report” (Publications Office 2020) <https://data.europa.eu/doi/10.2838/39830> accessed 6 December 2024.

254 ibid.

255 European Commission, Directorate-General for Justice and Consumers, Torres-Cortés F, Salinier C, Deringer H, Bright C and others, “Study on Due Diligence Requirements Through the Supply Chain- Final Report” (Publications Office 2020) <https://data.europa.eu/doi/10.2838/39830> accessed 6 December 2024.

256 Loi n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre [2017] JO 74 and Wet Zorgplicht Kinderarbeid (Child Labour Due DiligenceAct) 2019 (Netherlands) and Åpenhetsloven (TransparencyAct) 2021 (Norway).

emphasizing that a fragmented regulatory landscape, where each Member State applies its own set of rules, could undermine legal certainty and create unequal competitive conditions for companies operating within the single market.257 Harmonized legislation at the Union level not only ensures consistency but also strengthens respect for human rights and environmental protections, extending these obligations to third-country companies operating in the EU.258 This unified approach promotes legal certainty and a level playing field for companies operating in the single market.259

e. Protected Rights

In the annex of the Directive, the drafters have included a list of protected rights and prohibitions, along with the underlying legal instruments.260 Part one lists the rights and prohibitions enshrined in international human rights instruments. It includes the following: the right to life under Article 6(1) of the International Covenant on Civil and Political Rights; followed by the prohibition of forced or compulsory labour, interpreted in line with Article 2(1) of the International Labour Organisation’s Forced Labour Convention; and the child’s right to the highest attainable standard of health, interpreted in line withArticle 24 of the Convention on the Rights of the Child.261

The second part sets out prohibitions and obligations derived from environmental law instruments.262 For example, some obligations call for the avoidance or minimisation of adverse impacts on biological diversity, interpreted in line with Article 10(b) of the 1992 Convention on Biological Diversity; the prohibition of the unlawful handling, collection, storage and disposal of waste, interpreted in line with Article 6(1) of the Stockholm Convention on Persistent Organic Pollutants; and the obligation to prevent pollution from ships, interpreted in line with the amended International Convention for the Prevention of Pollution from Ships.263

257 Robert Schütze, European Union Law (Cambridge University Press 2018) 553.

258 ibid.

259 European Commission, ‘The Single Market at 30’COM(2023) 162 final, 16 March 2023, 2.2.

260 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting [2022] OJ L322/15,Annex.

261 ibid pt 1 arts 1, 8, 11.

262 ibid art 2.

263 ibid pt 2 arts 1, 7, 15.

In some cases, provisions of the CSDDD may conflict with those of another Union legislative act.264 In such cases, the applicable law will be determined using the general principle of public international lawknownas lex specialis,ensuringthat morespecificprovisions takeprecedence.265

f. Personal Scope

The Directive applies to both EU-based andnon-EU companies, setting clear thresholds to define its scope.266 For EU-based companies, the Directive applies to those employing more than 1,000 workers and generating a net worldwide turnover exceeding EUR 450 million.267 For non-EU companies, the Directive applies if their turnover within the Union exceeding EUR 450 million.268 It is important to highlight a crucial distinction regarding the Directive’s applicability: while for EU-based companies the turnover threshold refers to global revenue, for non-EU companies, the threshold must be surpassed within the Union. Moreover, there is no employee threshold for companies established outside the EU.

g. Transposition of the Directive

When first drafting this article in December 2024, the implementation timeline for the Directive was different from what it is at the time of revision in May 2025. On 26 February 2025, the European Commission proposed amendments to both the CSDDD and the CSRD, suggesting delaysintheirimplementation.269 Thisproposalcameinresponseto requests fromseveralMember States, who advocated for a simplification of administrative, regulatory, and reporting requirements particularly to easetheburdenonsmall andmedium-sizedenterprises (SMEs).The European Parliament accepted the amendments with an overwhelming majority, officially postponing implementation.270

264 ibid art 1(3).

265 ibid.

266 ibid art 2.

267 ibid art 2(1) (a).

268 ibid art 2(2) (a).

269 European Commission, ‘Proposal for a Directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements’ COM (2025) 81 final, 2025/0045 (COD), 26 February 2025.

270 European Parliament, ‘Sustainability and due diligence: MEPs agree to delay application of new rules’(Press Release, 3April 2025) <https://www.europarl.europa.eu/news/en/press-room/20250331IPR27557/sustainabilityand-due-diligence-meps-agree-to-delay-application-of-new-rules> accessed 4 May 2025.

Member States are now required to transpose CSDDD into their national laws by 26 July 2027, rather than by 2026 as originally proposed in the first draft.271 The amendment retains the Directive’s phased implementation approach, with the first stage applying to EU companies with over 5,000 employees and a net worldwide turnover of EUR 1.5 billion, as well as to non-EU companies generating the same turnover within the Union this stage has been delayed from 2027 to 2028.272 The application date remains unchanged for the second wave of companies: from 2028 the Directive will apply to EU companies with over 3,000 employees and a global turnover exceeding EUR 900 million, along with non-EU companies reaching EUR 900 million in turnover within the Union.273 Finally, by 2029, the Directive’s obligations will apply comprehensively to all companies within its scope, as defined inArticle 2 of the CSDDD.

h. Process of entering into force

The Directive’s development involved significant deliberation and negotiation among EU institutions andMemberStates.274 TheEuropeanCommission first proposed theDirectivein 2022, followed by alternative proposals from the European Parliament and the Council of the EU.275 A political agreement, referred to as the December Agreement, was reached in December 2023.276 However, Germany abstained from supporting the agreement due to conflicts with its national Supply Chain Act and concerns over the Directive’s expanded scope, including civil liability provisions.277 Germany’s stanceinfluenced otherMemberStates to withholdsupportbyabstaining or voting against the proposal, necessitating revisions.278

271 ibid.

272 ibid.

273 ibid.

274 Council of the European Union, ‘Corporate Sustainability’ <https://www.consilium.europa.eu/en/policies/corporate-sustainability/> accessed 7 December 2024.

275 European Commission, Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and Amending Directive (EU) 2019/1937 COM (2022)71 European Parliament, ‘Resolution of 16 February 2023 on Corporate Sustainability Due Diligence’ (2023) TA-92023-0209 <https://www.europarl.europa.eu/doceo/document/TA-9-2023-0209_EN.html> accessed 7 December 2024.

276 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

277 ibid.

278 ibid.

A compromise, known as the March Agreement, was finalized on 19 March 2024.279 This agreement narrowed the Directive’s scope, limiting it to the largest companies, and the European Parliament adopted it in April 2024.280 The original proposal by the European Commission envisioned broader applicability, targeting companies with over 500 employees and EUR 150 million in turnover, with lower thresholds for high-risk sectors such as textiles, agriculture, and mining.281 The December Agreement raised thresholds for high-risk sectors, while the March Agreement ultimately removedsectordistinctionsandincreasedthethresholds to 1,000employees and EUR 450 million in turnover.282

Additionally, Member States with prominent financial or extractive industries advocated for excluding these institutions from the Directive.283 As a result, financial institutions were partially exempted, and due diligence obligations for downstream activities were scaled back.284

i. Legal basis

The Directive finds its legal basis in Articles 50 and114 of the Treaty on the Functioning of the European Union (TFEU).285 Article 50 grants the EU the competence to act in specific areas to achieve freedom of establishment, particularly by coordinating safeguards required by Member States to protect stakeholders and others within companies, ensuring that these safeguards are equivalent across the Union.286 Moreover, Article 114 TFEU allows the EU to adopt measures to harmonize the legal provisions in Member States related to the establishment and functioning of the internal market.

279 Council of the European Union, Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence ST 6145/2024 INIT <https://data.consilium.europa.eu/doc/document/ST6145-2024-INIT/en/pdf> accessed 7 December 2024.

280 ibid.

281 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

282 ibid.

283 KPMG, ‘Progress on the EU Corporate Sustainability Due Diligence Directive’ (2024) <https://kpmg.com/xx/en/our-insights/regulatory-insights/progress-on-the-eu-corporate-sustainability-due-diligencedirective.html> accessed 7 December 2024.

284 ibid and Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, recitals 26.

285 Treaty on the Functioning of the European Union (Consolidated Version) [2012] OJ C326/47, art 50, art 114. 286 ibid.

II. Obligations under Directive

a. Transition plan

In 2018, the Intergovernmental Panel on Climate Change (IPCC) published a Special Report on global warming of 1.5°C, highlighting disturbingly severe consequences for all species, lands and oceans if global temperatures continue to rise 287 This report, alongside the Paris Agreement (a legally binding international treaty, aiming to limit global temperature increases to no more than 1.5°C above pre-industrial levels), served as a cornerstone for the drafters of the CSDDD.288

Building on thesefoundations, theCSDDDimposes asignificant obligationoncompanies to adopt climate change mitigation plans aligned with the Paris Agreement and EU Regulation 2021/1119 (“European Climate Law”, which aims to achieve climate neutrality).289 Companies are required to make an effort, to the best of their abilities, to limit global warming to 1.5°C. If a company has developed a transition plan, it must commit to implementing it.290

Furthermore, based on scientific evidence, companies must establish specific climate-related targets for 2030 and update them in five-year increments up to 2050.291 The goal of such planning is to achieve, as far as possible, an absolute emission reduction.292

b. Due diligence

A fundamental principle of the Directive is imposing corporate due diligence duties.293 Due diligenceis astandardof care thatabusiness is expectedto apply beforemaking large investments, through analysing all potential costs, risks and benefits, which allow the companies to choose the

287 Intergovernmental Panel on Climate Change (IPCC), Global Warming of 1.5°C: An IPCC Special Report on the Impacts of Global Warming of 1.5°C Above Pre-industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty (2018).

288 ParisAgreement (adopted 12 December 2015, entered into force 4 November 2016) UNTS 54113 and Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, recitals 73.

289 ibid art 22(1).

290 ibid.

291 ibid.

292 ibid.

293 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, art 5

best course of action.294 Usually, due diligence is undertaken by a company to avoid any financial losses.

The Directive extends this concept by obliging companies to identify and assess potential and actual adverse impacts on human rights and the environment.295 This obligationspans a company's operations, subsidiaries, and activities within its value chain, covering both upstream (productionrelated) and downstream (distribution-related) processes.296

The Directive mandates that due diligence principles be integrated into a company’s risk management systems and policies.297 Companies must formalize their approach through publicly accessible policies, including a detailed code of conduct that governs operations across the company and its subsidiaries and is communicated to all employees.298 These policies must be regularly updated, at least every two years, to ensure they remain relevant and effective.299

c. Prevention and remediation of adverse impacts.

Once potential adverse impacts on human rights and the environment are identified, companies are obligated to take measures to prevent them from occurring.300 If such impacts have already materialized, businesses must act to bring them to an end.301 The action of the company has to be effective: companies cannot just do something, so that it looks nice on paper. The measures taken by the company have to be able to actually work.302

In practice, companies may implement corrective action plans, upgrade facilities, or invest in alternative production methods to mitigate or prevent harm.303 If the identified impact arises from

294 Linda S Spedding, Due Diligence and Corporate Governance (Butterworth-Heinemann 2005) 1.3.

295 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, art 8(1).

296 ibid, recital 25.

297 ibid art 7(1).

298 ibid art 7(2)(a).

299 ibid art 7(3).

300 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, art 10(1).

301 ibid.

302 ibid art 10(1).

303 ibid art 10(2).

the conduct of more than one company, they are encouraged to collaborate on resolving the issue.304 When it is impossible to prevent or mitigate the impacts, the company shall disengage and cease entering further business relationships.305 It is important to point out that such action is to be used as means of last resort, where there are no less restrictive measures available.306

d. Providing remedies for adverse impacts.

If the company has caused an actual adverse impact, either alone or jointly, the company should be responsible for providing a solution and then starting the process of remediation.307 If such impact was caused by the company’s business partners, the company can do one of the following: it can either provide remediation itself, or it might use its ability to influence the business partner that is causing the adverse impact to provide a solution and a remediation.308

e. Shareholder engagement.

Corporations are required to engage with shareholders, providing them with meaningful information on all stages of the due diligence process, so that effective and transparent consultations can be carried out.309 If a shareholder requests information, and the company is refusing to provide such, the consulted stakeholders shall be entitled to a written justification for that refusal.310

f. Notification and complaint procedure.

The Directive mandates that companies establish accessible and transparent complaint mechanisms.311 These systems should allow affected natural or legal persons to submit grievances regarding potential or actual adverse impacts.312 The procedure must be fair, predictable, and publicly available, ensuring that all complaints are dealt with effectively and equitably.313

304 ibid art 10(2)(f).

305 ibid art 10(6).

306 ibid.

307 ibid art 12(1).

308 ibid art 12(2).

309 ibid art 13(1).

310 ibid, art 13(2).

311 ibid art 14(1).

312 ibid art 14(2)(a).

313 ibid art 14(3).

III. How to achieve those objectives.

a. Consequences of non-compliance.

Compliance with the Directive will be primarily enforced through administrative supervision.314 Each Member State is obligated to designate a national supervisory authority responsible for ensuring adherence to the rules.315 These authorities have extensive powers to investigate potential violations, including requesting documents and auditing companies.316 If a company is found to have failed its due diligence obligations, the supervisory authority can impose injunctions to correct the failure.317 Sanctions may also be applied, as long as they are proportionate, effective, and dissuasive.318

The calculation of penalties considers several factors, including the nature, severity, and duration of the infringement, alongside the impact's gravity.319 Along with mitigating or aggravating circumstances, such as whether the company demonstrated good faith in their efforts to comply..320 This ensures that enforcement measures are fair while maintaining sufficient deterrence.321

b. Enforcement for third-country companies.

For third-country companies without a subsidiary or branch, but still with a required net turnover in the EU, enforcement becomes more complex. The supervisory authority of the Member State where the company generates the highest proportion of its net turnover in the EU takes charge of enforcement.322 If such company fails to comply with an order from the authority, a public statement may be issued, explicitly identifying the company’s non-compliance.323 This measure serves as a reputational deterrent, encouraging implementation of the Directive’s obligations even among non-EU entities.324

314 ibid art 25(5).

315 ibid art 24(1).

316 ibid art 25(3).

317 ibid art 27(1).

318 ibid.

319 ibid 27(2).

320 Ibid.

321 ibid.

322 ibid.

323 ibid .

324 ibid.

c. Civil liability

A notable feature of the Directive is its provision for civil liability.325 Victims of harm resulting from a company’s intentional or negligent failure to fulfill its obligations under the Directive are entitled to full compensation for the damage suffered.326 Importantly, punitive damages are explicitly prohibited, focusing instead on fair restitution for the harm caused.327 The Directive also stipulates that liability does not extend to cases where the harm was solely caused by a business partner in the company’s value chain.328

To empower injured parties, the Directive allows for the representation of their interests by trade unions, non-governmental organizations specializing in human rights or environmental advocacy, or other non-governmental entities.329 This provision ensures that victims have access to justice, even in jurisdictions where collective representation mechanisms are underdeveloped.330 This approach aligns with the Directive’s overarching goal of ensuring accountability and remedy for adverse impacts on human and environmental rights.331

IV. Criticism

a. Reducing competition

The implementation of this Directive has sparked varying reactions. On one hand, several major companies have issued a joint statement highlighting the Directive's significance, emphasizing its potential to create a level playing field and promote fair competition.332 On the other hand, Christian Bruch, CEO of Siemens Energy, argues that the measures introduced by the EU are “disproportionate to the benefits”.333 He stated that the CSDDD will not enhance competitiveness

325 ibid art 29.

326 ibid art 29(1)(a,b).

327 ibid art 29(2).

328 ibid art 29(1).

329 ibid art 29(3)(d).

330 European Commission, Frequently Asked Questions: Corporate Sustainability Due Diligence Directive (CSDDD) (2024) <https://finance.ec.europa.eu/publications/frequently-asked-questions-implementation-eucorporate-sustainability-reporting-rules_en>accessed 6 December 2024.

331 ibid.

332 Business & Human Rights Resource Centre, Business Statement in Support of the EU Corporate Sustainability Due Diligence Directive (CSDDD) (April 2024) <https://media.businesshumanrights.org/media/documents/CSDDD_Business_Statement_2024.pdf> accessed 4 May 2025.

333 Joe Miller, ‘EU “completely overshooting” on green rules, Siemens Energy boss warns’ (Financial Times, 12 February 2025) <https://www.ft.com/content/98241f9c-7b98-4267-b073-2a2c57a3a548> accessed 4 May 2025.

but will instead place European companies at a disadvantage, particularly when compared to the economic policies of U.S. President Donald Trump. Mr. Trump’s agenda focuses on deregulation and rolling back environmental rules to makeAmerican companies more competitive on theglobal stage; an approach completely opposed to the EU’s more stringent regulatory framework.334 Christian Bruch is stressing that CSDDD is placing a burden too heavy on European businesses, making it almost impossible to stay competitive, unless the CSDDD is simplified.335

b. Non protection of all rights

The Directive has been criticized for its limited material scope, as it does not encompass the comprehensive protection of all human rights envisaged under the UNGP.336 The UNGP safeguards all human rights, whereas the Directive only covers those listed in its annex, which references only those instruments ratified by all EU Member States.337 This selective approach leaves significant gaps, as theannexomits crucial international agreements suchas theConvention Against Torture, the Convention on the Elimination of All Forms of Discrimination Against Women, and the Convention on the Elimination of All Forms of Racial Discrimination.338 The Directive also excludes major European human rights instruments like the European Convention on Human Rights and the EU Charter of Fundamental Rights.339

Furthermore, the Directive's focus on “abuses of human rights” contrasts with the broader UNGP approach, which includes any adverse impact on human rights.340 This narrower terminology potentially raises the thresholdfor applicability,limitingthescopeofduediligenceobligations and civil liability mechanisms.341 For instance, it remains ambiguous whether civil liability would require a finding of actual abuse or merely a breach of international human rights standards.342

334 ibid.

335 ibid.

336 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

337 ibid.

338 ibid

339 ibid.

340 ibid.

341 ibid.

342 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 [2024] OJ L189/42, art 29.

However, the CSDDD includes a review clause, allowing the European Commission to propose amendments to expand the scope of rights if deemed necessary.343

c. No safe harbor rule

Another possible omission in the Directive is a “safe harbor” provision: a mechanism that could shield companies from liability if they fulfill specific criteria demonstrating reasonable efforts to comply with obligations.344 Such rules exist in other legal contexts, like EU competition law, but were excluded from the Directive despite Germany's advocacy for their inclusion.345 This absence leaves companies without a safeguard in complex scenarios where full compliance might not be feasible.346 On the other hand, others argue that the safe harbor rule should not be included in the CSDDD, as there should not be an exemption for abusing human or environmental rights.347

d. Exclusion of financial institutions

The Directive has faced criticism for excluding the financial sector from its scope, given the sector's significant role and its historical challenges in protecting human rights.348 Although financial institutions are subject to the Sustainable Finance Disclosure Regulation (SFDR) introduced in 2022, SFDR's obligations primarily revolve around reporting due diligence policies and disclosing sustainability-related information.349 These requirements lack the comprehensive protectionsaffordedbytheCSDDDtheUNGP,ortheOECDGuidelines.350 Despitethislimitation, the Directive's review clause includes the possibility of extending its provisions to financial

343 ibid art 36(2)(d).

344 IOGP Europe, 'Position Paper on the Corporate Sustainability Due Diligence Directive (CSDDD)' (June 2022) <https://iogpeurope.org/wp-content/uploads/2022/06/CSDDD-Position-Paper.pdf> accessed 7 December 2024.

345 ibid.

346 ibid.

347 Expert Group on Global Climate Obligations, Principles on Climate Obligations of Enterprises (UNPRI 2020) <https://collaborate.unpri.org/system/files/2021-02/principles_on_climate_obligations_of_enterprises.pdf> accessed 2 June 2025.

348 Open Society Foundations, 'Shortcomings of the EU’s Corporate Sustainability Due Diligence Proposal in the Information Communications Technology Sector' (13 October 2022) <https://iogpeurope.org/wpcontent/uploads/2022/06/CSDDD-Position-Paper.pdf> accessed 7 December 2024.

349 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector [2019] OJ L 317/1.

350 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

institutions, potentially aligning their obligations more closely with the Directive's standards in the future.351

e. Limited scope of application

The Directive's approach to the downstream value chain is another area of critique.352 Unlike the UNGP and OECD Guidelines, which adopt a full downstream value chain perspective, the CSDDD narrows its focus.353 It does not explicitly address downstream considerations such as the design, marketing, sale, use, or disposal of products and services.354 This narrower interpretation limits theDirective's reachandpotentialimpact oncorporateactivities.355 Nevertheless, thereview article empowers the European Commission to propose extending the definition of "chain of activities" in subsequent reviews, allowing for a more expansive interpretation in the future if necessary.356

f. Limited personal scope

One of the key criticisms of the Directive lies in its limited personal scope, which stems largely from the German stance during the negotiations.357 Initially, the Directive was aimed at covering a broader range of companies, but due to political pushback, the scope was narrowed to apply primarily to large companies.358 This exclusion of small and medium-sized enterprises (SMEs) has generated concern, as SMEs are typically excluded from direct obligations under the Directive.359 Despite this, large companies with sufficient resources to comply with the CSDDD are expected

351 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting [2022] OJ L322/15, Art 36(1).

352 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

353 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting [2022] OJ L322/15, Recital 25.

354 ibid.

355 ibid.

356 ibid art 36(2)(c).

357 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

358 ibid.

359 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting [2022] OJ L322/15, Recital 46.

to provide targeted and proportionate support to their smaller business partners where required.360 This support could include assistance in implementing due diligence processes, considering the limited resources, knowledge, and constraints faced by SMEs.361 While acknowledging the difficulties SMEs may face in fulfilling these obligations, this shift also places greater responsibility on larger companies to ensure that the entire supply chain is compliant with the due diligence framework.

At the same time, there are concerns that SMEs may still be indirectly overregulated, as their need to comply with the strict requirements of the CSDDD could hinder innovation and growth.362 Moreover, compliance may raise operational costs and complicate day-to-day management, especially for SMEs with limited personnel and financial resources. As a result, these obligations may place local businesses at a competitive disadvantage, potentially leading them to scale down operations, relocation, or withdrawal from certain markets altogether.

g. Non-inclusion of directors’ duty of care

Another significant gap in the Directive is the non-inclusion of a specific "duty of care" clause for directors, aprovisionthatwaspartoftheEuropeanCommission'sinitialproposal.363 Intheoriginal draft, directors were expected to be personally accountable for sustainability matters, including human rights, climate change, and environmental protection, in line with their broader fiduciary duties.364 Under this provision, directors wouldhave been responsible foroverseeing due diligence implementation.365 However, due to opposition from several member states during the legislative process, this responsibility was removed from the final version of the Directive.366 As a result, directors are not explicitly bound by the Directive to enforce sustainability measures, leaving

360 ibid.

361 ibid.

362 Francesco Fiaschi, ‘Corporate Sustainability Due Diligence Directive: A Step Too Far for SMEs?’ FEDIL écho (16April 2024) <https://fedil-echo.lu/opinion/corporate-sustainability-due-diligence-directive-a-step-too-far-forsmes/> accessed 4 May 2025.

363 Danish Institute for Human Rights, The EU Corporate Sustainability Due Diligence Directive (2024) <https://www.humanrights.dk/files/media/document/DIHR_The%20EU%20Corporate%20Sustainability%20Due% 20Diligence%20Directive_0.pdf> accessed 7 December 2024.

364 ibid.

365 ibid.

366 ibid.

367

companies to determine best ways to allocate responsibility for compliance with due diligence requirements within their leadership structures.

h. Foreign legal barriers

Anothercriticism was offeredbyJeremyAzzopardi, whowarnedthat theduediligenceobligations under the Directive could pose significant risks for European companies operating in China.368 He argued that China's stringent anti-espionage laws may make it challenging entities to gather the necessary in order to comply with the Directive, potentially exposing them to criminal liability under Chinese law.Azzopardi suggested that this challenge could compel EU-based companies to scale back operations, relocate production, reduce their market share, or even withdraw entirely from major markets like China. This raises a critical question: why is obtaining such information in China so problematic? Is it purely due to the government’s intense concerns over espionage, or is it an attempt to shield potential human rights abuses and environmental violations - the very issues that the CSDDD seeks to expose?

V. Conclusion

In conclusion, the CSDDD marks a significant milestone in binding corporate due diligence legislation regarding human rights and environmental protection. While it is true that the directive has faced considerable criticism. This criticism is often twofold: some argue that the CSDDD imposes overly lenient requirements, while others believe the European Union should have adopted an even stricter approach. The implementation process has been challenging, as the EU comprises 27 Member States, each with its own priorities and policies. The EU’s legislative procedure- requiring cooperation between both the Parliament and the Council- is based on negotiation and compromise, aiming to find common ground among diverse member interests to ensure directives like the CSDDD can be effectively adopted.

Despite some disagreement, the Directive's impact should not be underestimated. The inclusion of civil liability allows victims to seek full compensation. This provision gives the CSDDD the

367 ibid.

368 European Union Chamber of Commerce in China, ‘Pleasing Nobody: The EU’s Corporate Sustainability Due Diligence Directive’ EURObiz (Issue 80, May/June 2024) <https://staticeurobiz.europeanchamber.com.cn/wpcontent/uploads/2024/06/EURObiz_2024_M-J.pdf> accessed 4 May 2025.

potential to improve the protection of fundamental rights across the EU and globally, as it enables affected individuals to hold corporations accountable for their actions or omissions. Moreover, by including companies from both the European Union and third countries, it sets an important precedent for global accountability.

Theimplementationofthisdirectivemaybeuncomfortable.Butmeaningfulchangeisrarely easy; and in this case, it is necessary. The burden placed on companies is minimal compared to the immense harm and suffering caused to people who lack the means to defend themselves. This legislationisessentialtoholdcorporationsaccountablefortheirmisconduct andtopromotegreater responsibility. CSDDD plays a crucial role in steering businesses toward more ethical and sustainable practices. The international community watches with anticipation to see the impact of this Directive’s implementation.

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