Status on the CSDD Directive

On 13 September 2023, the Danish Corporate Governance Board (in Danish: “Komitéen for god Selskabsledelse”) published their annual account for 2022-2023 presenting their work during this period. The account contains a status on the CSDD Directive which is still negotiated in the EU.

The CSDD Directive is expected to impact a vast number of companies and it is currently subject to triparty negotiations within the EU. Not only does the Directive address due diligence but it also contains regulation on corporate governance – hence the focus on the Directive from the Danish Corporate Governance Board.

The main issues currently discussed in the EU are:

• Thresholds for companies within scope of the regulation
• Whether the risk-based due diligence is to be undertaken in the “value chain” or “activities chain” (essential distinction in regard to the scope)
• Duties, responsibilities and liabilities of the management
• Sanction level and statute of limitations

Especially the possible interventions with company law and the extent of liability and responsibility of the management have been of great concern, among others to the Danish Corporate Governance Board. We are continuously monitoring the negotiations within the EU closely and the development of the CSDD Directive to determine the implications and responsibilities entailed by the Directive and how companies can prepare. You can read more on the overall takeaways from the original proposal from the European Commission in our earlier update on the matter available here. Further, we refer to our update on the approach adopted by the Council available here.

Next Step: The next step will be the final wording of the Directive which is pending. The European Parliament adopted amendments to the proposal 1 June 2023 and the matter was referred back to the committee responsible for inter-institutional negotiations. More on the process in the EU can be accessed here.

The annual account of the Danish Corporate Governance Board is available here (in Danish). Section 2.2 focus on the CSDD Directive.

Tags:  CSDDDSustainability