Corporate Sustainability Due Diligence Directive: economic and legal implications

On April 24, 2024, the European Parliament, after protracted negotiations, adopted the final text of Directive 2024/1760/EU ("Corporate Sustainability Due Diligence Directive" or "CSDDD"), which was published in the Official Journal of the EU on July 5, 2024. The CDDDD imposes new obligations for companies within their scope to prevent and mitigate negative impacts on human rights and the environment. These obligations relate to actual and potential human rights violations and negative environmental impacts caused by:

• the company's own operations;
• the operations of their subsidiaries;
• operations within the value chain, both upstream (production of goods, provision of services) and downstream (distribution, transportation and storage of products).

Companies covered by the CSDDD will need to incorporate due diligence on human rights risks and potential environmental damage using a risk-based approach. This means that if it is not possible to address all identified negative impacts at the same time, companies must prioritize their actions based on the severity and likelihood of these impacts. To fulfill this obligation, companies must develop a due diligence policy, draft a code of conduct (also applied to subsidiaries and business partners) and provide a description of the process and implementation of the due diligence policy, including measures to verify its effective application. (Melania Mazzonová, more at lexology.com)