The Council and the European Parliament have reached an agreement on the proposed Corporate Sustainability Due Diligence Directive (CSDDD). The draft CSDDD was presented in 2022 and establishes an obligation for large companies to take responsibility for the actual and potential adverse effects that companies and their value chains cause to the environment and human rights by taking due diligence into consideration. You can read more about CSDDD here.
The provisional agreement includes the following:
- Large companies with more than 500 employees and global annual sales of 150 million euro are subject to the future requirements.
- Companies in non-EU countries are also included if they have more than 150 million euro of sales generated in the EU.
- Financial services are temporarily exempt and can be expected to be included at a later stage after an adequate impact assessment has been carried out.
- Regulations on the companies’ obligation to adopt and implement a conversion plan to mitigate climate change.
- Access to justice for persons affected will be strengthened by:
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- a five-year period for bringing an action,
- restrictions on the disclosure of evidence,
- measures for injunctions, and
- limitation of the plaintiff’s costs for the proceedings.
- Obligatory requirements for companies to terminate business relationships when adverse effects have been identified in those relationships, unless the adverse effects can be prevented or cease to exist
- Further possibilities for sanctioning involve fines based on the company’s sales in the event of non-payment of fines previously imposed.
- Compliance with the CSDDD may be used as a criterion in public procurements.
The next step in the legislative process is for the agreement to be approved and formally adopted by both the Council and the European Parliament.
Lindahl continues to follow the development of the CSDDD. You are welcome to contact us if you have any questions about what the future regulations mean for you.
