With the adoption of the Corporate Sustainability Due Diligence Directive, the EU has taken a significant step forward in the protection of human rights and the environment by introducing new legally binding rules for Member States concerning the largest companies. The Directive needs to be effectively transposed into national legislation, which requires initiating dialogue early and involving a wide range of stakeholders, followed by ensuring effective monitoring of its implementation. This was the conclusion of a conference dedicated to the Directive, held on 22 October 2024 in Zagreb, organized by the Ombudswoman Tena Šimonović Einwalter.
Opening the conference, the Ombudswoman emphasized that the Directive could benefit both citizens and the business community. In order to strengthen the protection of human rights and the environment, and in relation to the implementation of due diligence measures aimed at responsible business conduct, the Directive prescribes the establishment of meaningful cooperation between companies and stakeholders. It also introduces an obligation for companies to set up grievance mechanisms and establishes civil liability in cases where damage is caused by business operations. On the other hand, the Directive can bring benefits to companies such as increased consumer trust, better risk management, and greater appeal to prospective employees. For the Directive to be effectively implemented in Croatia through legislation and practice, it is essential to ensure a high-quality transposition into national law. The Ombudswoman organized the conference to raise awareness about the Directive and to bring together various stakeholders – the business community, public administration, trade unions, and civil society organizations – so that the discussion on transposition could begin early and include a broader range of interested actors.
The Minister of Environmental Protection and Green Transition, Marija Vučković, welcomed the organization of the conference, considering it a positive and motivating introduction to the preparation and implementation of the newly adopted Directive. She highlighted the importance of the Corporate Sustainability Directive particularly regarding environmental protection as one of the priorities. The implementation could also be supported by a new instrument of the Ministry – fund management through an organizational fund with a budget of €1.3 billion.
Ana Čulo, Head of the Investment Sector at the Ministry of Economy, presented the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. These are non-binding recommendations, but they include the obligation to establish mechanisms for reporting violations of the Guidelines and providing mediation and conciliation services in such cases. Adhering countries are required to establish National Contact Points for Responsible Business Conduct, and Croatia’s was established in May 2019.
Associate Professor Damir Muhvić from the Faculty of Law at the University of Osijek presented the rights and obligations set out in the Directive. He emphasized that the Directive does not apply to all companies, but only to those with more than 1,000 employees and a global annual net turnover of €450 million, as well as to third-country companies with €450 million in annual net turnover within the EU. This represents the minimum scope defined by the Directive, but Member States are free to broaden the scope and thereby increase the number of companies subject to its provisions.
Later in the conference, a panel discussion was held on the next concrete steps and examples of positive business practices were presented. Petra Jurina, Head of the Service for General Regulations in Civil, Procedural and Commercial Law at the Ministry of Justice, Public Administration and Digital Transformation, pointed out that the legal system would undergo a significant change, given that Croatia currently lacks legislation covering the obligations outlined in the Directive. She also stressed the need to decide on a national supervisory authority, which should be independent and have sufficient financial and human resources. There may be more than one such authority, and they will have powers to impose sanctions, including fines, and to issue interim measures such as remedying harm and stopping harmful conduct.
Branka Pivčević Novak, Head of the Climate Activity Sector at the Ministry of Environmental Protection and Green Transition, stated that Croatia has and implements several strategies aligned with the objectives of addressing global crises related to environmental protection, biodiversity conservation, and the green transition. She noted that the legal framework transposing this Directive into Croatian law will support these same goals, which is essential as these crises undermine both quality of life and business operations.
Dijana Kesonja, Deputy Ombudswoman, stated that the Office of the Ombudswoman has long-standing experience and multiple mandates relevant to the Directive’s focus on human rights and the environment. In terms of implementation, the institution will play a multifaceted role. Firstly, in the implementation process by providing comments and suggestions for improved solutions during the development of the legal framework; secondly, as a body to which – in accordance with the Whistleblower Protection Act – irregularities can be reported, likely to include those covered by the Directive. The institution will also play an active role through meaningful cooperation with the business sector, supervisory authorities, and other stakeholders such as trade unions, employer associations, and civil society organizations engaged in the protection of human rights and the environment. Looking further ahead, in six years when the Directive is reviewed, there will be an opportunity to provide constructive proposals for its improvement, which is useful given that no regulation can anticipate all real-life situations.
Mirjana Matešić, Director of the Croatian Business Council for Sustainable Development (HR PSOR), emphasized that the Directive encourages businesses to introduce processes and assess negative impacts in their value chains. Its implementation, she said, depends on creating enabling conditions that incentivize companies. Essentially, the Directive represents an extension of responsibility within supply chains.
Antonija Lončar, Director of Marketing, Communications and Corporate Social Responsibility at Ericsson Nikola Tesla Group, placed particular emphasis on internal audits. She also presented practices through which the company aims to contribute to both the digital transition and risk reduction in the production chain.
Sara Foršek Pažin, a sustainability and business expert from M SAN Group, shared the company’s practice of conducting in-depth checks of all suppliers, including visits to China to inspect suppliers directly, assess working conditions, talk to employees, and examine in greater detail the environmental impact of their entire production.
Sofija Babić, Public Policy Advisor at the World Wide Fund for Nature Adria (WWF Adria), emphasized that this global organization believes in the potential for companies to transform their operations. They support many companies in enhancing their understanding of the importance of biodiversity conservation and in making their business practices more sustainable. Examples in Croatia include a hotel chain that monitors its menus and removes endangered species, and connects the company with small island-based fishing communities. Globally, WWF Adria has established a partnership with a retail chain to trace the origins of products to ensure they are not linked to deforestation.
During the discussion, it was emphasized that this conference provided a “neutral ground” where the Ombudswoman, as an independent institution, brought together the business community, trade unions, civil society organizations, and institutions. It was also noted that it would be beneficial to continue convening all interested parties on this topic to further discuss various aspects of human rights protection in the corporate sector.