Final approval by the EU Parliament of the Corporate Sustainability Due Diligence Directive

Today, 24 April 2024, the Corporate Sustainability Due Diligence Directive (“CSDDD”) received the final green light from the European Parliament.

The CSDDD is part of the EU’s cornerstone ESG regulation and lay down rules on:

• Companies regarding actual and potential human rights adverse impacts and environmental adverse impacts. This with respect to their own operations, the operations of their subsidiaries and the operations carried out by their business partners in companies’ chains of activities.
• Liability for violations of the obligations mentioned above.
• Obligation to adopt and put into effect a transition plan for climate change mitigation which aims to ensure, through best efforts, compatibility of the business model and strategy of the company with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C.

The new rules will apply gradually to EU companies (and non-EU companies reaching the same turnover thresholds in the EU):

• From 2027 to companies with 5,000+ employees and a worldwide turnover higher than EUR 1,500 million;
• From 2028 to companies with 3,000+ employees and a EUR 900 million worldwide turnover;
• From 2029 to all the remaining companies within the scope of CSDDD (including those with 1,000+ employees and worldwide turnover higher than 450 million euro).

Our previous update on CSDDD (which takes a more in-depth look into CSDDD) can be accessed here.

Next steps

CSDDD now needs to be formally endorsed by the EU Council. Then it will enter into force 20 days after publication in the EU Official Journal. The EU member states have two years to implement CSDDD into national laws.

We continue to monitor CSDDD closely including how it will affect other EU ESG regulation and the process for national implementation.

Tags:  CSDDDSustainability