Corporate Sustainability Due Diligence Directive (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD) is a legislative measure adopted by the European Union (EU) that mandates large companies to conduct comprehensive human rights and environmental due diligence across their operations, including those of their subsidiaries and business partners within their supply chains. The directive aims to foster sustainable and responsible corporate behavior, ensuring that companies identify, prevent, mitigate, and account for adverse human rights and environmental impacts.

Key obligations under the CSDDD include:

• Due Diligence Integration: Embedding due diligence processes into corporate policies and risk management systems.
• Impact Assessment: Identifying and assessing actual and potential adverse human rights and environmental impacts within the company's operations, subsidiaries, and value chains.
• Preventive and Corrective Measures: Implementing measures to prevent or mitigate potential impacts, and bringing actual impacts to an end or minimizing their extent.
• Monitoring and Reporting: Regularly monitoring the effectiveness of due diligence measures and publicly communicating on due diligence practices in accordance with the Corporate Sustainability Reporting Directive (CSRD).
• Stakeholder Engagement: Consulting stakeholders, including affected communities and employees, at various stages of the due diligence process.
• Complaints Procedure: Establishing a complaints mechanism to allow for the reporting of concerns related to human rights and environmental impacts.

The directive also requires companies to adopt a transition plan for climate change mitigation, aligning their business models and strategies with the goals of the Paris Agreement to limit global warming to 1.5 °C.

Member States are required to transpose the directive into national law by July 2026, with the provisions becoming applicable to companies in a phased manner starting from July 2027, depending on the company's size and turnover.

Source(s):

• European Commission. (2024). Corporate sustainability due diligence.
• European Commission. (2024). Frequently Asked Questions about the Corporate Sustainability Due Diligence Directive (CSDDD).
• Official Journal of the European Union. (2024). Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence.

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