Yesterday, the EU Council and the European Parliament reached a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD), which aims to protect the environment and human rights in the EU and worldwide.
The Due Diligence Directive imposes obligations on large companies regarding actual and potential negative impacts on human rights and the environment. This affects EU companies with more than 500 employees and a net turnover of 150 million euros and includes their own business activities, those of their subsidiaries and those of their business partners.
Companies must therefore carry out a risk analysis of their supply chains and, if necessary, initiate measures to minimize the risks. The directive also strengthens access to justice for those affected (“civil liability”), according to which those affected by negative impacts (including trade unions and NGOs) have 5 years to make claims. If companies violate the directive, they can be subject to penalties equal to 5% of the company’s net sales.
The provisional agreement reached with the European Parliament must now be approved and officially adopted by both institutions (which is considered a formality in Brussels).
It is great that the Due Diligence Directive has now been adopted in this form and will give all European companies legal certainty in the future and a level playing field in matters of human rights and environmental protection for companies with 500 or more employees. In the last point, the EU directive goes beyond the German Supply Chain Act, which can be seen as a great success and a step in the right direction!