Stay Compliant With
EU’s Corporate Sustainability Due Diligence Directive (CSDD)
European Commission summarizes due diligence as the processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence can be included within broader enterprise risk management systems, provided that it goes beyond simply identifying and managing material risks to the enterprise itself, to include the risks of harm related to matters covered by the guidelines.
The European Commission’s legislative proposal for a Corporate Sustainability Due Diligence Directive (CSDD) is an important contribution to the strengthening the private sector’s contribution to the implementation of the European Green Deal, and achievement of the Sustainable Development Goals. It forms part of a larger set of policy initiatives on global value chain sustainability, which were adopted under the umbrella of the European Green Deal. This new directive complements, for example, the Corporate Sustainability Reporting Directive, Sustainable Product Initiative, and the Regulation on Deforestation-free Products.
What is a due diligence process?
Due Diligence means that companies must take appropriate measures to prevent, end or mitigate impacts on the rights and prohibitions included in international human rights agreements. This could be, for example, ensuring workers’ access to adequate food, clothing, and water and sanitation in the workplace. Companies are also required to take measures to prevent, end or mitigate negative environmental impacts that run contrary to a number of multilateral environmental conventions. The new proposal also requires certain large companies to adopt a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C, in line with the Paris Agreement.
The due diligence process – 6 key steps
- Reducing greenhouse gas emissions from the forest sector.
- Conserving and enhancing the role of forests in biodiversity conservation.
- Supporting sustainable livelihoods for forest-dependent communities.
- Promoting the sustainable management of forests.
- Contributing to the achievement of broader sustainable development goals.
Companies in scope of the Directive
Large EU companies
>500 employees and >EUR 150 Mio. turnover worldwide (ca. 13.000)
Large non-EU companies
>EUR 150 Mio. turnover in the EU (ca. 4.000) OR >40 Mio. in EU provided 50% of the turnover is in high-risk sectors (garment and textile, agriculture, forestry, mineral etc…)
Mid-sized companies
>250 employees and a >EUR 40 Mio. turnover worldwide operating in high-risk sectors (garment and textile, agriculture, forestry, mineral etc…)
Which accompanying measures can support implementation of due diligence legislations?
The EU is developing accompanying measures at global, regional and local levels to support businesses, business support organizations, governments and civil society throughout global value chains (both in EU and third countries). The Corporate Sustainability Due Diligence (CSDD) can be a potential sustainable trade opportunity for producing countries, provided the measures are implemented inclusively. We identified eight different categories of support, while many measures span across more than one of those categories. When developing new accompanying support actions, a continuous dialogue and engagement with affected stakeholders must happen across the measures at different levels to capture successes and failures and application from theory to practice, from global to local and vice versa.
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