A General Approach on the CSDD Directive Proposal Adopted by the Council

On 1 December 2022, the Council adopted its general approach on the proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD) which was adopted by the European Commission on 23 February 2022. This completes the negotiations in the Council.

With the general approach, the Council has proposed changes to the original proposal. Among others, the proposed changes include:

• Removal of requirement for member states to have national regulation for the situation where directors do not fulfill their duty to consider consequences that their decisions on sustainability matters may have.
• Proposal for a phase-in approach for the application of the rules. 3 years after the entry into force of the CSDDD, it shall apply to large companies with more than 1,000 employees and a worldwide net turnover of EUR 300 million. For non-EU companies, the threshold shall be EUR 300 million EU-generated net turnover. The proposed phase-in approach also regulates the requirements for falling within the scope of the CSDDD 4 and 5 years after its entry into force.
• Clarifying that the CSDDD shall apply to the “chain of activities” of the company. This chain includes the company’s upstream and, to a limited extent, downstream business partners.
• Strengthening of the CSDDD’s risk-based approach.
• Clarifying the civil liability conditions which provides full compensation for damages that are a result of a company not complying with its due diligence obligations.

The general approach provides the Council presidency with a mandate to initiate negotiations with the European Parliament, in which the CSDDD will now be processed.

The Council’s general approach is available here. For an overview of the European Commission directive proposal, see our previous Pulse update here.

Tags:  CSDDDSustainability