CSDDD Timeline Explained
The Corporate Sustainability Due Diligence Directive (CSDDD), also known as CS3D, is a legislative initiative by the European Union. It ensures that large companies take responsibility for their human rights and environmental impacts.
This directive complements the Corporate Sustainability Reporting Directive (CSRD) and the EU taxonomy by mandating companies to address and minimise these impacts. Member States are required to incorporate the CSDDD into national law by 26 July 2026.
What is the Timeline for CSDDD?
The CSDDD timeline allows companies time to prepare for compliance. It will be implemented in phases, with different deadlines for various categories of companies.
- From 26 July 2027: The largest companies with over 5,000 employees and a turnover of €1.5 billion must comply. Application starts for financial years beginning on or after 1 January 2028.
- From 26 July 2028: Companies with over 3000 employees and €900 million turnover must comply. Application starts for financial years beginning on or after 1 January 2029.
- From 26 July 2027: Non-EU companies with an EU net turnover of over €1.5 billion need to comply, starting for financial years beginning on or after 1 January 2028.
- From 26 July 2028: Non-EU companies with an EU net turnover of more than €900 million must comply. The application starts for financial years beginning on or after 1 January 2029.
- From 26 July 2029: Other covered companies, both EU-based and non-EU companies will need to comply. The application for these companies will begin for accounting years starting on or after 1 January 2029.
What is the Current Status of the CSDDD?
The CSDDD entered into force 25.7.2024 and is in the process of being transposed into national laws by the Member States. This process must be completed by 26 July 2026.
The directive aims to ensure that companies integrate due diligence into their policies to identify and address actual and potential adverse effects. The CSDDD is a crucial part of the EU’s strategy to promote corporate responsibility, holding companies accountable for their human rights and environmental impacts to foster a more sustainable and ethical business environment within the EU and beyond.
How to comply with the Corporate Due Diligence Directive?
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.
Start with:
- 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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