The Corporate Sustainability Due Diligence Directive, also called the CSDDD or CS3D, establishes corporate due diligence requirements on sustainability issues for companies operating in the bloc. The new duty of care standards apply not only to the direct actions of a company but also to its subsidiaries and suppliers.
The CSDDD will apply to European companies with at least 1,000 employees and €450 million in turnover, which includes about 5,400 businesses. It will be phased between 2027 and 2029, starting with larger companies with more than 5,000 employees and giving smaller ample time to prepare. The directive will also cover businesses outside the EU if they exceed a sales threshold in the European market.
Despite being a scaled-down version of its original proposal, the CSDDD will significantly influence corporate supply chains, ensuring they play a pivotal role in mitigating adverse human rights and environmental impacts. Climate obligations such as implementing transition plans are necessary to get companies to do their fair share.
And Now?
The framework has been set; the key, as ever, will lie in how the rules are implemented. At this juncture, companies, especially in countries where no national supply chain laws exist, should take steps to ensure compliance. Here are some key strategies to follow.
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