CSDDD and EU: Why has EU adopted the Corporate Sustainability Due Diligence Directive?
What is the CSDDD in the EU?
The Corporate Sustainability Due Diligence Directive (CSDDD) is a new legislative measure introduced by the European Union in 2024.
The directive requires companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts within their operations and value chains. It applies to large EU companies and non-EU companies with significant operations in the EU, ensuring due diligence processes are followed.
Why Has the EU Adopted the CSDDD EU Directive?
The EU adopted the CSDDD EU directive to enhance sustainability, protect human rights, and increase corporate accountability.
The directive aligns with the European Green Deal and climate targets, aiming to transition the EU towards a climate-neutral economy by 2050. It complements existing EU regulations on non-financial reporting and sustainable finance.
What Are the Next Steps for the EU CSDDD?
Now that the CSDDD has entered into force, member states must integrate the directive into their national laws by July 2026. The directive will be implemented in phases, with full compliance required by July 2029.
Companies should prepare by evaluating their due diligence practices, addressing human rights and environmental risks, and establishing transparent reporting practices. The CSDDD aims to hold companies accountable for their impacts and foster a more sustainable global economy.
The CSDDD introduces a wide range of obligations for the companies it covers, and it is a good idea to start planning to meet the obligations.
How to get started?
- Identification of potential and actual adverse effects. Take a look at the human rights and environmental impacts of your business. Also, the adverse effects of business relationships should be considered.
- Stakeholder collaboration. Consultation with stakeholders provides valuable information on potential and actual adverse effects.
- Drafting a code of conduct. What principles and rules are followed in your business and business relationships?
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