IBA ESG Conference Side Event Panel Discussion: Principle of Non-Regression and the CSDDD

1. National Laws and CSDDD

France

• The French Duty of Vigilance Law is often described as broad, but in practice its operational scope is more limited than commonly assumed.
• The biggest likely change under CSDDD is not which companies are covered, but which activities and business relationships fall within scope.
• CSDDD would significantly expand coverage across the chain of activities, including indirect business partners.
• Transposition of CSDDD is expected to clarify and flesh out requirements, including applicable international standards, stakeholder engagement expectations, and due diligence processes.
• The vigilance-plan requirement is unusual and does not align neatly with the CSDDD structure, which separates due diligence action from sustainability reporting.
• The transposition period is especially important because courts are actively shaping the meaning of existing national laws and due diligence obligations for years to come.
• Courts are only now beginning to develop significant case law under the Duty of Vigilance Law: those judicial interpretations may create a baseline that later becomes protected by non-regression principles.
  
  • One key example is climate change: French courts are being asked whether climate-related harms fall within the law’s scope. If courts interpret the law broadly, that could establish a higher national standard, which may be difficult to lower later if this emerges before or during transposition.

Germany

• Germany’s Supply Chain Act has been politically controversial since its adoption. The current government has not repealed the law, but has reduced the practical significance of some reporting and enforcement elements.
• Germany is expected to replace the existing law with a dedicated CSDDD transposition law in which:
  
  • CSDDD will narrow the personal scope because it uses higher threshold criteria
  • CSDDD will broaden substantive obligations, including covering more parts of downstream and indirect supply chain, strengthening stakeholder engagement, and involving a wider catalogue of environmental and human rights standards

Norway

• Norway’s Transparency Act has been described as feasible, tangible, and concrete, which reflects its drafting. The Act is short and pragmatic, and it embeds proportionality in the due diligence process. 
• Early evaluations suggest that it has had a significant and largely positive impact. Some stakeholders, however, emphasize the importance of avoiding unnecessary administrative burdens and ensuring alignment with international rules.
• The Norwegian law currently covers far more companies than CSDDD, which raises the question of whether Norway will need to narrow its coverage.
• The Transparency Act addresses human rights and decent working conditions; the Environmental Disclosure Act requires companies to obtain information about their environmental impacts and to disclose that information to the public on request. However, neither law establishes a broader sustainability due diligence regime of the kind contemplated by the CSDDD.
• One possible outcome was a split model: keeping broader human-rights obligations for a wider set of companies but applying narrower thresholds to sustainability obligations.

2. Non-regression as a Legal Principle

• Non-regression was presented as an implicit principle that legal protections should not be materially weakened without strong justification.
• The principle does not prohibit legislatures from changing the law, but they may face legal limits when changes would unjustifiably reduce protection for human rights, environmental interests, and other related fundamental values.
• This principle may become especially important during CSDDD transposition in countries that already have national due diligence laws: in those contexts, the legal question is not just whether a law changes, but whether the change lowers an already established level of protection.

3. Enforcement, Fragmentation, and Forum Shopping

• Enforcement remains one of the most fragmented parts of the European due diligence landscape since different countries rely on different models.
• The omnibus process weakened harmonization on civil liability, and transposition may produce more fragmentation. 
• This may encourage forum shopping by claimants, especially NGOs and trade unions, based on broad standing rules, favorable civil liability theories, and more receptive courts.
• France was identified as particularly attractive because of its broad standing rules and evolving case law.
• The result could be a more complex and strategically contested enforcement environment across Europe.

4. Simplification at EU Level does not Equal Lower Compliance Risk

• Companies do not operate only under domestic statutory rules. They face pressures and obligations arising from: soft law commitments, contracts, investor expectations, reputational concerns, foreign regulatory regimes, and community opposition.
• Even if governments weaken formal legal requirements, companies may still face serious consequences for backtracking on earlier commitments connected to the UN Guiding Principles, the OECD Guidelines, and responsible contracting frameworks
• In practice, fragmentation may increase costs because companies must navigate multiple overlapping regimes rather than a single predictable one.
• The practical challenge is long-term risk management, not merely formal legal compliance.

5. Possible Role of Investment Treaties

• Omnibus process could have implications under bilateral investment treaties or similar agreements, including clauses discouraging the lowering of standards.
• The key implication is that consequences of regulatory change may extend beyond domestic and EU law into international investment law.

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