In this month’s installment of our legislation series, Raluca Anghel, Natural Diamond Council Head of External Affairs and Industry Relations, provides a summary of the EU’s Corporate Sustainability Due Diligence Directive (CSDD). This series aims to provide members with industry insight on topic areas such as; greenwashing and misleading claims, environmental claims, due diligence, corporate sustainability reporting and much more.
Putting human rights and environmental stewardship at the core of businesses: EU’s Directive on Corporate Sustainability Due Diligence (CSDD).
The directive that entered into force in July 2024, introduces obligations for large companies regarding the impacts of their activities on human rights and environmental protection. It also lays down the liabilities linked to these obligations. The rules concern not only the companies’ operations, but also the activities of their subsidiaries, and those of their business partners along the companies’ chain of activities ranging from the upstream production of goods or the provision of services, to the downstream distribution, transport, or storage of products.
Companies affected by the legislation adopted today will have to take and implement a risk-based system to monitor, prevent or remedy human rights or environmental damages identified by the directive.
Which companies are targeted:
- Large EU limited liability companies & partnerships: 1000 employees and >EUR 450 million turnover (net) worldwide.
- Large non–EU companies: EUR 450 million turnover (net) in EU. SMEs:
- Micro companies and SMEs are not covered by the proposed rules.
However, the Directive provides supporting and protective measures for SMEs, which could be indirectly affected as business partners in value chains. From 26/07/2029, the CSDDD shall apply to all companies in scope (+ 1000 employees & a net worldwide turnover of + €450 million in the last financial year).
The European Commission shall adopt a series of supporting guidance and guidelines such as voluntary model contractual clauses, methodology for companies to assess the fitness of industry and multi-stakeholder initiatives as well as a Single helpdesk, and EU Member States shall set up dedicated websites.
KEY INFO:
Evaluation of the legislation by 26/07/2030. The directive will apply depending on the size of the companies following this timeline: 3 years from the entry into force of the directive for companies with more than 5 000 employees and €1 500 million turnover 4 years from the entry into force for companies with more than 3 000 employees and €900 million turnover 5 years from the entry into force of the directive for companies with more than 1 000 employees and €450 million turnover].
Disclaimer:
The information in this post does not constitute legal advice. Any information provided is intended to explain the law in general terms. You are advised to seek independent legal advice to ensure legal compliance as required for your type of business and geographical location.
