Directive (CSDDD) on due diligence of enterprises in the field of sustainability 2024/1760

Directive of the European Parliament and of the Council (EU) 2024/1760 (CSDDD) Corporate Sustainability Due Diligence Directive of 13 June 2024 on corporate due diligence in the field of sustainability and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (Text with EEA relevance)

This directive lays down rules for companies regarding their liability for actual and potential adverse impacts on human rights and the environment. It mainly focuses on their own activities, the activities of their subsidiaries and business partners within their chains of activities. The directive aims to achieve more sustainable economy and on limiting global warming.

Key Aspects of the Directive:

• Scope of application: The directive applies to large companies with a certain turnover and number of employees. It includes companies from the EU and third countries that meet the set criteria.
• Due care: Companies must implement a due diligence process that includes:
  • Identification and assessment actual and potential adverse impacts on human rights and the environment.
  • Prevention, mitigation, removal or minimization the extent of these influences.
  • Provision of remedy in case of actual adverse effects.
  • Stakeholder engagement, including employees, unions and communities.
  • Introduction of a notification mechanism and complaint procedure.
  • Monitoring the effectiveness of the measures taken.
  • Public information about your due diligence.
• Transformation Plan for Climate Change Mitigation: Companies must adopt a plan to ensure that their business model is compatible with the commitments of the Paris Agreement on climate change.
• Adverse effects: The Directive defines "adverse effects on human rights" and "adverse effects on the environment". They include violations of international conventions and standards in the field of human rights and the environment.
• Responsibility: Companies can be civilly liable for damages caused by their failure to comply with due care obligations. The Directive sets out rules on limitation periods, access to evidence and court orders.
• Sanctions: Member States must provide effective, proportionate and dissuasive sanctions for violation of the directive, including fines.
• Support: The Commission and the Member States will provide guidelines, support and tools to help companies fulfill their obligations. This also includes specialized websites, platforms a portals.

Important Terms:

• A chain of activities: It includes all activities related to the production and sale of the company's products or services, from the acquisition of raw materials to the final consumer.
• Business partner: Includes suppliers, subcontractors, distributors and other entities with which the company cooperates within its chain of activities.
• Stakeholders: They include everyone affected by the company's activities, including employees, trade unions, local communities and non-governmental organizations.
• Due care: A systematic process of identifying, preventing, mitigating and resolving adverse impacts on human rights and the environment.

Objective of the Directive:

The Directive on due diligence of companies in the field of sustainability aims to:

• Protect human rights and the environment in global value chains.
• Strengthen sustainability and support the transition to a low-carbon economy.
• Increase corporate responsibility for their impact on society and the environment.
• Create a level playing field for companies in the EU internal market.

Conclusion:

This directive represents a significant step towards more sustainable and responsible business. Misleading binding rules for companies and provides them tools and support for their fulfillment. The directive is expected to have a positive impact on human rights, the environment and the fight against climate change.