CSDDD

What is it? 

The Corporate Sustainability Due Diligence Directive (CSDDD) is a European regulation, introduced in March 2021. It aims to prevent companies from causing or contributing to environmental and human rights abuses throughout their value chains The directive is designed to address the increasing risks of human rights abuses and environmental damage caused by the activities of companies, their subsidiaries, and their suppliers.

Who does it apply to: 

The CSDDD applies to both EU and non-EU companies. For EU based companies, it applies to those with over 500 employees and a turnover of over €150 million. Nonetheless, companies with over 250 employees and €40 million, also fall under the directive, if 50% of their revenue comes from what is classified as a high-risk industry such as fashion or minerals. For non-EU companies operating within the EU, they also fall under the scope of the CSDDD, meaning that as long as their revenue is generated in the EU, irrespective of whether they have a subsidiary in the region. The CSDDD is expected to directly impact around 13,000 companies within the EU and approximately 4,000 outside the EU. 

The due diligence process under the CSDDD must be proportionate to the company's size, sector, and the risks it faces. It must include the following steps:

• Identifying the environmental and human rights risks associated with the company's activities and value chains.

• Assessing the severity and likelihood of these risks and mitigate them supported by an action plan with a clear timeline to address the identified risks. 

• Establish grievance mechanisms for workers and stakeholders to raise issues if they arise. 

• Align their business model and strategy with the Paris Agreement climate target

• Publicly report on their due diligence publicly, like a sustainability report or on the company’s website. 

The CSDDD also includes provisions for companies to cooperate with each other and with public authorities to address environmental and human rights risks.The CSDDD is a groundbreaking regulation that is expected to have a significant impact on the way that companies operate. It is designed to help companies prevent environmental and human rights abuses, and to promote sustainable and responsible business practices.