Corporate Sustainability Due Diligence Directive (CSDDD)

 

The endorsed draft directive is a compromise reached after many months of negotiations over its key regulations.

 

 

As its name indicates, the CSDDD includes provisions introducing human rights and environmental due diligence requirements. Its aim is to prevent unfavourable impact of the activities of enterprises, their subsidiaries, and of their contracting parties involved in the so-called chain of activities, on the above-mentioned areas. The directive is to reinforce the protection of human rights, including workers' and social rights, mitigate climate changes, and limit global warming.

 

 

The CSDDD applies to companies from the EU and third countries.

 

The EU Member States will have to transpose the directive into their national legislations within 2 years after it comes into force. The rules established by the directive are planned to be implemented gradually. First, after 3 years of the directive's effective date, it will apply to the largest companies which employed on average over 5,000 people and whose global net revenues exceeded 1,500 million euro in the last financial year for which they prepared financial statements. After 4 or 5 years, the directive should be extended to cover smaller companies, ultimately those with average headcount of over 1,000 and with global net revenues exceeding 450 million euro a year.

 

The directive is supposed to force certain companies to exercise due diligence as regards the protection of human rights and the environment as part of their business operations, and to increase the liability for breaching those obligations.

 

The draft directive is scheduled to be voted on in the European Parliament in April.

 

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