The CSDDD, Corporate Governance and Jadar Lithium

This paper is about the types of undertakings that will be subject to CSDDD obligations, the substantive and procedural due diligence requirements applicable to these undertakings, and the consequences thereof for the internal governance of groups of companies. The theoretical framework will be tested against the Rio Tinto project to open a lithium mine in the Serbian Jadar valley, which entails substantial risks for people and the environment. CSDDD obligations relating to this project will, inter alia, apply to the top holdings of Rio Tinto and indirect lithium buyers such as Mercedes-Benz and Stellantis, as well as certain operational subsidiaries thereof. It will be laid bare that, in terms of substantive due diligence requirements, the CSDDD and the international treaties it refers to include many open norms. This leaves CSDDD undertakings with some room for judgement and balancing interests. Much of the legal focus will be on the procedural due diligence mandated by the CSDDD. This provides a corporate governance character to the CSDDD. The required ‘meaningful engagement’ with stakeholders will be important. Also, CSDDD undertakings will be held accountable for both their own activities and the activities of their subsidiaries. They control their subsidiaries and will be expected to impose proper CSDDD policies on them. Thus, the CSDDD will contribute to further developing the doctrine of intragroup governance. Technically, the CSDDD is a fine piece of work. Whether it will actually move the needle for people, the environment and climate will remain to be seen. The Omnibus-proposal presented by the European Commission on 26 February 2025, including some proposed changes to the CSDDD, is not discussed and has no material impact on the findings in this paper.