The European Commission proposed a directive on Corporate Sustainability Due Diligence (CSDD) on February 23, 2022. The directive would require companies to conduct due diligence on their supply chains to identify and mitigate any potential negative impacts on human rights and the environment.

The legislative process for the CSDD Directive is currently ongoing in the Council of the European Union and the European Parliament (EP). The EP adopted its position on the directive on May 31, 2023. The EP's position includes a number of amendments to the Commission's proposal, such as:

  • Expanding the scope of the directive to cover more companies
  • Strengthening the due diligence requirements
  • Increasing the transparency and accountability of companies

The Council of the European Union is currently negotiating its own position on the directive. Once the Council and the EP have agreed on a common position, the directive will be adopted.

The CSDD Directive is a significant piece of legislation that could have a major impact on how companies operate in the EU. The directive is expected to come into force in 2024.

Impact of the CSDD Directive

The CSDD Directive is expected to have a number of positive impacts on the EU economy and society. These include:

  • Increased transparency and accountability of companies
  • Reduced risk of human rights and environmental abuses
  • Increased investment in sustainable practices
  • Improved working conditions for workers in supply chains

The CSDD Directive is also expected to create new jobs in the EU, as companies will need to hire staff to conduct due diligence and implement sustainable practices.

Conclusion

The legislative process for the CSDD Directive is ongoing, but the directive is expected to be adopted in 2024. The directive is a significant piece of legislation that could have a major impact on how companies operate in the EU. The directive is expected to lead to increased transparency and accountability of companies, reduced risk of human rights and environmental abuses, increased investment in sustainable practices, and improved working conditions for workers in supply chains.

The CSDD Directive is a piece of legislation that would require companies to conduct due diligence on their supply chains to identify and mitigate any potential negative impacts on human rights and the environment. The directive would cover companies that have more than 500 employees or a turnover of more than €150 million.

The due diligence requirements under the CSDD Directive would be extensive. Companies would need to:

  • Identify the risks of human rights and environmental abuses in their supply chains
  • Assess the severity of those risks
  • Take steps to mitigate the risks
  • Monitor the effectiveness of their mitigation measures
  • Report on their due diligence efforts

The CSDD Directive would also create a number of new enforcement mechanisms. Companies that fail to comply with the directive could be fined up to 2% of their global turnover.

The CSDD Directive is a significant piece of legislation that could have a major impact on how companies operate in the EU. The directive is expected to lead to increased transparency and accountability of companies, reduced risk of human rights and environmental abuses, increased investment in sustainable practices, and improved working conditions for workers in supply chains.

Here are some of the specific benefits of the CSDD Directive:

  • Increased transparency and accountability of companies: The CSDD Directive would require companies to disclose information about their due diligence efforts, which would help to increase transparency and accountability. This would allow stakeholders to hold companies accountable for their actions and to demand that they improve their practices.
  • Reduced risk of human rights and environmental abuses: The CSDD Directive would help to reduce the risk of human rights and environmental abuses by requiring companies to identify and mitigate risks in their supply chains. This would help to protect workers and the environment from exploitation.
  • Increased investment in sustainable practices: The CSDD Directive would encourage companies to invest in sustainable practices by requiring them to take steps to mitigate risks. This would help to promote a more sustainable economy.
  • Improved working conditions for workers in supply chains: The CSDD Directive would help to improve working conditions for workers in supply chains by requiring companies to take steps to mitigate risks. This would help to ensure that workers are treated fairly and that they have safe and healthy working conditions.

The CSDD Directive is a complex piece of legislation, but it has the potential to make a significant positive impact on the EU economy and society. The directive is expected to be adopted in 2024, and it will be important to monitor its implementation to ensure that it is effective.

 

by Ekin CENGİZ