CS3D: Corporate Purpose and Directors' Duties and Liabilities

In the Twentieth Century at European level, businesses − especially when carried on by stock companies − have been addressed by Private Law mandatory rules aiming at essentially protecting employees, consumers, suppliers, and creditors. Several interests, such as safeguarding human rights, as well as preserving the environment, have been pursued through traditional legal means, thence primarily relying on Public Law mandatory regulations applicable either to individuals or to businesses. Nonetheless, this conventional approach differs from the most up-dated regulatory framework adopted by the EU, which states that − in an increasingly globalised economy − efforts to address adverse effects of companies’ actions on human rights or the environment are largely ineffective. On the contrary, measures reducing pollution or facing human rights abuses should − reasonably and effectively – be adopted only if simultaneously taken across all jurisdictions. Therefore, EU Institutions have produced an impressive set of regulations and directives, among which the Corporate Sustainability Reporting Directive (CSRD) is very important for our purposes. However, EU institutions held that the fragmentation of national rules on Corporate Sustainability related to due diligence obligations slows down the take up of good practices, so that − with the adoption of the Corporate Sustainability Due Diligence Directive (CS3D) − EU policymakers seem to abandon a purely market-driven approach. Accordingly, the presentation discusses the main issues related to the CS3D, particularly by highlighting the implications that the Directive at stake would have on relevant and “topical” notions such as the “corporate purpose”, as well as directors’ duties and liability. The pivotal issue is whether the CS3D actually addresses Corporate Governance, namely being able to set forth a shift from a conventional “shareholder-oriented” one to a renewed “multi-stakeholder” governance. Along with the opinions expressed by prominent legal scholars about the lack of clarity of the relevant rules, it seems here convenient to warn that an “extensive” interpretation of the directive – in particular, having regard to rights and duties of corporate directors − can carry uncertain legal and practical effects and also conflict with fundamental principles of the EU Single Market.