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

The Corporate Sustainability Due Diligence Directive (CSDDD) is an EU directive aimed at promoting sustainability in businesses and monitoring the social and environmental impacts of their business activities. This directive sets requirements for companies to ensure that they implement so-called 'Due Diligence' procedures to identify, assess, and mitigate environmental and social risks in their supply chains. This is intended to obligate companies to pursue more sustainable business practices and minimize potential negative impacts on the environment, society, and governance.

When does the CSDDD come into effect?

• The final approval by the EU was granted on April 24, 2024

• Expected entry into force 20 days after publication in the EU Official Journal

• EU member states have two years to implement nationally

2027 (3 years after entry into force): CSDDD applies to companies with:
- More than 5,000 employees
- More than 1.5 billion EUR in revenue

2028 (4 years after entry into force): CSDDD applies to companies with:
- More than 3,000 employees
- More than 900 million EUR in revenue

2029 (5 years after entry into force): CSDDD applies to companies with:
- More than 1,000 employees
- More than 450 million EUR in revenue

What is the difference between CSDDD and CSRD?

Corporate Sustainability Due Diligence Directive (CSDDD):

• This directive is a proposal from the European Commission aimed at requiring companies to consider due diligence regarding human rights and environmental issues throughout their entire supply chain. The goal is to avoid, mitigate, and remedy adverse impacts on human rights and the environment.

• Companies are to systematically identify potential and actual negative impacts in their supply chains, take preventive measures, and report on their efforts.

• The CSDDD places a stronger emphasis on the proactive steps that companies must take to prevent or mitigate negative impacts on human rights and the environment.

Corporate Sustainability Reporting Directive (CSRD):

• The CSRD expands the existing reporting obligation for sustainability issues (formerly known as the Non-Financial Reporting Directive, NFRD) and increases the quality and scope of sustainability reports that companies must publish.

• This directive aims to ensure that companies transparently report on their environmental impacts, social aspects, and governance practices. This includes information on issues such as greenhouse gas emissions, water usage, and labor rights compliance.

• The CSRD requires that reports be prepared according to specific standards to ensure consistency and comparability.

Who is affected by the CSDDD?

This applies to companies with:

• More than 1,000 employees

• More than 450 million EUR in revenue

The Corporate Sustainability Due Diligence Directive marks a significant step by the EU towards a more sustainable economy and is expected to have far-reaching effects on companies and supply chains worldwide.