On 14/12/2023, the EU Council and Parliament today reached a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD), which focuses on environmental protection and human rights in the EU and globally.
Obligations for Companies
- Setting rules on obligations for large companies, covering their entire business chain, including subsidiaries and business partners.
- Requiring companies to align their business practices with the Paris Agreement on climate change.
Scope
- Affects large companies with over 500 employees and a net worldwide turnover of €150M; including the non-EU companies with a net turnover of €130M generated in the EU.
- Financial sector will be temporarily excluded. However, a review provision is included for potential future inclusion, contingent on a comprehensive impact assessment.
Climate Change and Civil Liability
- Obligation of large companies to adopt mandatory transition plans for climate mitigation.
- Reinforcing access to justice of persons affected and a 5-year period for claims.
Penalties
- Non-compliance could lead to fines up to 5% of net turnover.
- Companies must also engage in meaningful dialogue with affected stakeholders.
Public Procurement
Compliance with the CSDDD could become a criterion for awarding public contracts.
The next step is for the provisional agreement reached with the European Parliament to be endorsed and formally adopted by both institutions.