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EU Nears Approval of Corporate Sustainability Rules: Demands Rigorous Due Diligence from Large Businesses

Due DiligenceEU Nears Approval of Corporate Sustainability Rules: Demands Rigorous Due Diligence from Large Businesses

Lawmakers in the European Parliament and Council have provisionally agreed on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), defining rules for large businesses to assess and address adverse human rights and environmental impacts in their value chains. The agreement builds on the European Commission’s proposed CSDDD directive from February 2022, obligating companies to identify, assess, prevent, and remedy impacts on people and the planet in their supply chains. Applicable to EU companies with over 500 employees and €150 million in global revenues, the directive also covers non-EU companies with more than €300 million net revenue generated in the EU. It mandates due diligence integration, climate transition plans aligned with the Paris Agreement, engagement with affected parties, and supervision and sanctions. However, concerns were raised about the exclusion of the financial sector from some obligations, despite a review clause for potential future inclusion. The CSDDD awaits formal approval by the EU Council and Parliament before enforcement.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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