Expected economic effects of the EU Corporate Sustainability Due Diligence Directive (CSDDD)

Johannes Jäger, Gonzalo Duran, Lukas Schmidt
#EU / Western Europe
#Social and working conditions
#Sustainability standards
#Corporate responsibility and lead firms

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This study assesses the possible economic impacts of the EU Corporate Sustainability Due Diligence Directive (EU CSDDD). On the theoretical level, perspectives from neoclassical economics are combined with the value chain approach, and with the power resources perspective. Empirically, this study provides a brief overview of economic development, international trade, and human rights with a focus on the Global South. Based on a deductive methodology, comparative-static and dynamic analyses are combined to estimate the likely impacts of the EU CSDDD. Thereby, the study focuses on the effects on the Global South, the effects on global competition and the EU, and the effects on European and Austrian workers. The conclusion drawn is that the EU CSDDD is expected to have a considerably positive economic welfare effect on the Global South and positive net effects on the European economy. In addition, it tends to strengthen the position of workers not only in the Global South but also in the European Union. It is crucial that an effective EU CSDDD, including the financial sector, is implemented to ensure that these potential positive economic effects occur.

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