Towards the Regulation of Sustainability: some reflections on the recent Amendments to the Italian Constitution and the Proposed European Directive on due diligence

As is well known, the issue of sustainability of economic development, especially in the sense of climate change management, is engaging the political agenda of the main countries on the planet with increasing intensity.

Among the evolutionary lines of the system, there is, in particular, a growing trend towards the regulation of sustainability, i.e., the regulation of legal relations with the aim of ensuring the satisfaction of the needs of the present generation without compromising those of future generations (a concept often summarized in the acronym “ESG“). Just think, to give a few examples, of the French loi pacte (2019), the codification of benefitcompanies in Italy (2015), and, as early as 2006, Section 172 of the English Companies Act.

In the wake of this trend are two recent regulatory interventions that directly concern, in the first case, and indirectly, in the other case, our country: the legislative decree. of constitutional reform containing some amendments to articles 9 and 41 of the Italian Constitution on environmental protection, definitively approved by the Chamber of Deputies on February 8, 2022, and the Resolution of the European Parliament of March 10, 2021, the Annex of which contains a Proposal for a Directive of the European Parliament and of the Council on due diligence and corporate liability (hereinafter, “Proposal for a Directive”).

With the first intervention, in a nutshell, a new paragraph is added to art. 9 of our Constitution, so that “the protection of the environment, biodiversity and ecosystems, also in the interest of future generations” is included among the fundamental principles of the Constitutional Charter. Moreover, a reserve of law is introduced to define the ways and forms of animal protection. Finally, with regard to private economic initiative (art. 41 Cost.), the reform introduces two new limits to the freedom of economic initiative, namely the safeguarding of health and that of the environment. In addition, according to the new paragraph 3 of art. 41 of the Constitution, the destination and coordination of public and private economic activity takes place not only with regard to social purposes but also to environmental ones.

Moving on to the second instrument, on the other hand, it imposes on certain companies, along their entire value chain (which includes, for example, subsidiaries, suppliers, etc.), the obligation to elaborate – with the involvement of the stakeholders – and according to articulated methods, a “due diligence strategy” for the respect of “human rights, the environment and good governance“. The latter is translated into a series of maps, internal processes and organizational structures, subject, among other things, to publication, evaluation and possible annual review (always in coordination with the stakeholders).

This obligation is, moreover, assisted by a substantial system of sanctions, which makes, among other things, companies civilly liable in the event of “any damage resulting from actual or potential negative impacts on human rights, the environment or good governance that they, or companies controlled by them, have caused or contributed to by their acts or omissions” (art. 19, par. 2).

What do these two recent instruments have in common when it comes to regulating sustainability?

In the first place, it can be said that both are an expression of the system’s tendency to progressively shift, in terms of sustainability, from soft regulation, understood as a set of rules and principles of a non-binding nature and subject to voluntary compliance by the various legal entities, to hardregulation, that is, regulation through legal normsof a (necessarily) obligatory nature. On the other hand, the Proposal for a Directive itself, in recital 4, specifies that it is based on the premise that the soft law instruments currently available to businesses have proved to be totally ineffective.

Secondly, both (with the clarification below) are the expression of that further tendency to “focus” on the company and its management to pursue and implement ESG objectives (or, if preferred, the protection of human rights, the environment and good governance), on the basis of the twofold assumption, then, that, on the one hand, it is mostly the companies and their system that collide with these objectives (or at least impact them) and, on the other hand, that (large) companies have assumed, with globalization, a “force” such as to make up for the inertia and inability of the States.

This, at least, if one accepts a reading of art. 41, paragraph 2, Const. (on the limits to the freedom of private economic initiative, especially with regard to the limit of “social utility”) according to which it would contain a norm of a non merely programmatic nature (addressed, that is, only to the legislator, who would be required to identify and regulate the limits to the freedom of private economic initiative, without prejudice to the fact that everything fallingwithin said limitswould be considered perfectly legitimate), but of a preceptive nature: a norm, that is, directly addressed to the market operators, who should (self-)limit themselves so that the economic activity does not result concretely in contrast with social utility, human dignity, the environment, and the other limits provided for in art. 41, comma 2, Cost. The “how” is still to be defined.

In any case, it remains to be asked whether – remaining on the level of the politics of law – it is “constitutionally” appropriate that the choices concerning the selection of collective interests to be protected and the modalities of resolution of conflicts (if any) among them – implying decisions of a political nature – should be entrusted, in countries of representative democracy, to subjects which directly or indirectly base their legitimacy on the vote expressed by the electorate, or, rather, to companies (including private ones); The question arises, in other words, whether it is appropriate for the State to “pass the baton” of safeguarding ESGvalues directly to companies (and, therefore, to their managers or shareholders).

Giulia Ballerini

Insights

Cian, Principi dell’ordinamento giuridico-economico e sviluppo sostenibile in Italia e Austria, forthcoming in Nuove leggi civ., 1/2022

European Company Law Experts Group, The European Parliament’s Draft Directive on Corporate Due Diligence and Corporate Accountability, in Riv. soc., 2021, 276 ss.

Macchi, C. Bright, Hardening Soft Law: the Implementation of Human Rights Due Diligence Requirements in Domestic Legislation, in Legal Sources in Business and Human Rights – Evolving Dynamics in International and European Law, edited by M. Buscemi, N. Lazzerini, L. Magi, D. Russo, Brill, 2020, 218 ff.

Marchetti, Il bicchiere mezzo pieno, in Riv. soc., 2021, 336 ss.

Niro, in Commentario alla Costituzione, edited by R. Bifulco, A. Celotto, M. Olivetti, Utet, 2006, sub art. 41, 846 ss.

Sacchi,La capacità propulsiva della s.p.a. quotata è andata esaurendosi?, in ODC, 2021, 581 ss.

U. Tombari, La proposta di Direttiva sulla Corporate Due Diligence e sulla Corporate Accountability: prova (incerte) di un “capitalismo sostenibile”, in Riv. soc., 2021, 375 ss.