ESG and Mandatory Human Rights Due Diligence (HRDD): Lessons for India from the EU Corporate Sustainability Due Diligence Directive (CSDDD)

Abstract

Environmental, Social, and Governance (ESG) norms have emerged as a central pillar of modern corporate responsibility, with human rights due diligence (HRDD) increasingly positioned at their core. The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD), adopted in 2024, represents a landmark shift from voluntary soft-law frameworks to binding obligations requiring companies to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts across their value chains. This directive not only reshapes corporate governance in the EU but also influences global supply-chain behaviour, with significant implications for countries like India that are deeply integrated into European markets.

India currently relies on a voluntary ESG ecosystem supported by the Business Responsibility and Sustainability Report (BRSR), the National Guidelines on Responsible Business Conduct (NGRBC), and sector-specific regulations. However, the absence of a mandatory, comprehensive HRDD regime creates gaps in enforcement, accountability, and global competitiveness. As Indian businesses increasingly cater to EU buyers, alignment with mandatory due diligence standards becomes both an economic necessity and a strategic legal priority.

This paper critically analyses the CSDDD as a blueprint for designing an Indian HRDD framework suitable for the country’s legal, regulatory, and socio-economic context. It examines how EU-style obligations—such as board-level responsibility, supply-chain mapping, risk-based due diligence, grievance mechanisms, and civil liability—could be adapted to strengthen India’s ESG landscape. The study also highlights challenges, including compliance burdens for MSMEs, fragmented labour-law enforcement, and the need for capacity-building. Ultimately, the paper argues that a phased, context-sensitive HRDD model could enhance India’s global trade positioning, reduce rights violations, and promote sustainable, accountable business practices.