Professor Johannes Jäger, Head of the Economics Department at the University of Applied Sciences BFI Vienna, in conversation with CSF Board member Simone Robbers explores what the EU Corporate Sustainability Due Diligence Directive (CSDDD) means for international investors.
Watch the video and read the summary below.
The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) has been diluted through the recent omnibus process, but its core direction remains intact. As Professor Johannes Jäger emphasised in a recent presentation to CSF partners, this is not a regulatory shift that businesses or investors in New Zealand can afford to ignore.
The direction of travel is unchanged
While the scope of the directive has been narrowed and some elements removed mandatory sustainability due diligence is here to stay. The EU is moving from voluntary standards to enforceable obligations, and this reflects a broader global shift in economic governance.
Even in its weakened form, the CSDDD will reshape how large companies manage human rights risks across their supply chains. Crucially, these expectations will cascade beyond directly regulated firms to suppliers and partners worldwide, including New Zealand businesses.
Early movers will have a competitive edge
A key message from Jäger is that preparation is not just about compliance, but strategy. Companies that invest early in understanding and managing their supply chain risks will be better positioned as preferred partners.
As European firms reassess their supply chains, they are likely to favour suppliers who can demonstrate credible due diligence processes and low risk of human rights violations. This creates a clear opportunity for businesses and jurisdictions that can provide transparency, robust systems and verifiable standards.
Due diligence is about managing risk, not perfection
Jäger highlighted a common misunderstanding: due diligence does not require companies to map every detail of their supply chains or eliminate all risks.
Instead, it is a risk-based approach. Companies are expected to identify their most significant risks, take reasonable steps to address them, and demonstrate that they have systems in place to manage those risks effectively. This is comparable to financial risk management frameworks in banking.
Improving understanding of this concept is critical. Misinterpretation can lead to unnecessary fear and resistance, when in reality the process can strengthen business resilience and decision-making.
The global ripple effect is coming
Despite the political compromises in Europe, the EU remains a powerful standard setter. Jäger pointed to the likelihood of a “Brussels effect”, where EU regulations influence global norms.
Countries and companies that align with these standards will find it easier to access European markets. Over time, similar approaches may emerge in other jurisdictions and international frameworks, reinforcing the shift towards mandatory due diligence.
In 2025, CSF made recommendations to the Government on a strategy for financing sustainable growth in Aotearoa New Zealand. Chapter two, on page 12, addresses enabling credible disclosures. Read the recommendations here.
