On May 24, 2024, the Council completed the final step in the EU decision-making process, formally adopting the Corporate Sustainability Due Diligence Directive (CSDDD) that was proposed by the European Commission in February 2022. This landmark directive imposes new obligations on large companies, with over 1,000 employees and a net turnover exceeding €450 million, affecting their own activities as well as those of their subsidiaries and business partners across the entire supply chain, with a focus on human rights and environmental protection.
The new requirements span the entire scope of business operations, from upstream production and service provision to downstream distribution, transportation, and storage of products.
Under the directive, companies must establish and implement a risk-based system to monitor, prevent, and address human rights abuses and environmental damages. If violations occur, companies are obligated to take appropriate measures to prevent, mitigate, and rectify adverse impacts caused by their operations, those of their subsidiaries, and their business partners. Companies can be held liable for damages and must provide full compensation.
Affected companies are also required to develop and execute a climate transition plan aligned with the Paris Agreement on climate change, which will aim to ensure that the business model and strategy of the company are compatible with the transition to a sustainable economy.
Following the publication of the directive in the Official Journal of the European Union, Member States will have two years to implement the necessary regulations and administrative procedures. The directive’s application is phased based on the company size:
- 3 years from the directive’s entry into force for companies with over 5,000 employees and €1,500 million turnover
- 4 years from the directive’s entry into force for companies with over 3,000 employees and €900 million turnover
- 5 years from the directive’s entry into force for companies with over 1,000 employees and €450 million turnover
At Christys & Co LLC, Advocates and Legal Consultants, our expert team ensures compliance with the latest due diligence regulations effectively safeguarding your company’s operations.
