Corporate Sustainability Due Diligence Directive (CSDDD)

What is the Corporate Sustainability Due Diligence Directive (CSDDD)?‍

The Corporate Sustainability Due Diligence Directive (CSDDD, also known as CS3D) is a European Union initiative that aims to oblige companies to consider their impact on human rights and the environment in their value chains. This directive is part of the EU's broader plan to promote sustainability and responsible business conduct. It requires companies to carry out due diligence to identify and mitigate potential negative impacts of their business activities.

What are the goals of the CSDDD?

The CSDDD aims to promote sustainable business practices within the EU by ensuring that companies are held accountable for the social and environmental impacts of their business activities. It aims to create a level playing field, increase transparency and ensure that companies respect human rights and environmental protection throughout their supply chains.

The environmental goals of the CSDDD

The directive sets out specific requirements to avoid negative impacts on the environment and human rights. It covers various aspects, including the protection of biodiversity, the reduction of environmental pollution, sustainable resource management and adaptation to climate change as well as the reduction of greenhouse gas emissions.

Who is affected by the Corporate Sustainability Due Diligence Directive?

1. EU-based companies and their parent companies with more than 500 employees and a global annual turnover of more than 150 million euros.
2. Companies outside the EU are affected if they achieve an annual net turnover of 300 million euros in the EU three years after the directive comes into force.
3. Companies with more than 250 employees and an annual turnover of more than EUR 40 million are subject to this regulation, provided that at least EUR 20 million of this turnover is generated in sectors classified as high-risk. These sectors include the manufacture and wholesale of textiles, clothing and footwear; agriculture, including forestry and fishing; food production and trade in agricultural products; the extraction and wholesale of minerals and the manufacture of related products and the construction sector.

What does the CSDDD mean for companies?

The introduction of the Corporate Sustainability Due Diligence Directive underlines the growing importance of sustainability and social responsibility in the business context. Companies will need to adapt their internal processes to meet the requirements of the Directive and may need to re-evaluate their relationships with suppliers and other business partners. Compliance with the CSDDD can not only reduce the risk of legal sanctions, but also improve brand image and contribute to long-term business stability.

The CSDDD is an essential step towards a more sustainable and responsible economic model in the EU. It ensures that companies have the necessary processes in place to identify and manage their environmental and human rights impacts and promotes a culture of transparency and accountability.