Mapping Risks and Opportunities

EU Iron Imports From Brazil Under the Corporate Sustainability Due Diligence Directive (CSDDD)

Abstract

This research investigates the environmental, social, and governance (ESG) risks and opportunities associated with iron ore imports from Brazil by EU companies, framed by the Corporate Sustainability Due Diligence Directive (CSDDD). The goal is to enhance the understanding of actionable due diligence measures for EU enterprises, connecting the identified ESG impacts of iron ore mining in Brazil with the compliance requirements stipulated in the CSDDD. The significance of this research lies in the crucial role of iron ore as an essential commodity for global infrastructure development. Despite its importance, the socio-environmental implications of iron ore extraction often receive insufficient attention. The catastrophic failures of tailings dams in Mariana (2015) and Brumadinho (2019) led to a substantial loss of life and severe environmental degradation. These events underscore the pressing need for EU companies to implement robust ESG frameworks within their supply chains. This study is particularly relevant in the current regulatory climate, given the shortcomings of previous soft laws in effectively identifying adverse human rights and environmental impacts within global value chains. The research employs Philipp Mayring’s mixed-methods approach, integrating qualitative and quantitative analyses to assess the existing literature on iron ore mining in Brazil. Frequency analysis is conducted on 45 scholarly publications (in English, Portuguese, and German) from diverse disciplines, applying predetermined coding categories derived from the Topical European Sustainability Reporting Standards (ESRS) and the specific articles from the international instruments outlined in the CSDDD Annex. This methodological framework enables the exploration of ESG topics and their reflections within CSDDD requirements. An initial premise underlying this research was that solely relying on existing voluntary ESG frameworks might not sufficiently equip companies to meet the stringent requirements of hard law like the CSDDD, particularly regarding specific human rights and environmental risks embedded in complex supply chains. It was hypothesized that integrating the international instruments referenced in the CSDDD Annex into the analysis would provide critical insights essential for robust due diligence. Partial results confirm that while the analysis using ESRS codes prominently highlights environmental issues such as pollution, biodiversity loss, and waste management, the coding based on the CSDDD Annex instruments underscores the critical interconnectedness of environmental degradation and human rights violations. Key findings reveal that mining impacts are frequently linked to violations of the right to life (ICCPR Art. 6), land rights, freedom from forced labor (ICCPR Art. 8, ILO Conventions), the right to health for affected communities (ICESCR Art. 12, Child Rights Convention Art. 24), and the protection of ecosystems and cultural heritage, as articulated in various international conventions. The analysis demonstrates that the CSDDD Annex brings vital international legal instruments to the forefront, offering a systemic perspective on sustainability that highlights the profound social and governance repercussions of environmental issues. These findings provide EU companies with essential data to proactively identify high-risk areas and opportunities within their Brazilian iron ore value chains, aligning their sustainability efforts with mandatory human rights obligations.