The Corporate Sustainability Due Diligence Directive (CSDDD) is a significant legislative proposal introduced by the European Commission. Let’s break down its key aspects:
- Purpose and Scope:
- The CSDDD aims to foster sustainable and responsible corporate behavior by imposing obligations on companies regarding human rights and environmental due diligence.
- It applies to large companies operating within the European Union (EU) and their global value chains.
- Due Diligence Obligations:
- Companies covered by the directive must conduct appropriate due diligence related to:
- Their own operations.
- Operations of their subsidiaries.
- Operations of their business partners within their value chains.
- The focus is on identifying and addressing potential and actual adverse impacts on human rights and the environment.
- Companies covered by the directive must conduct appropriate due diligence related to:
- Climate Change Mitigation:
- Large companies subject to the directive must adopt and implement a transition plan for climate change mitigation.
- This plan aligns with the EU’s 2050 climate neutrality objective under the Paris Agreement and intermediate targets set by the European Climate Law.
- Benefits:
- For Citizens:
- Enhanced protection of human rights, including labor rights.
- A healthier environment for present and future generations, including addressing climate change.
- Increased trust in businesses due to transparency.
- Improved access to justice for victims.
- For Companies:
- Harmonized legal framework within the EU, ensuring legal certainty and a level playing field.
- Greater customer trust and employee commitment.
- Better risk management, resilience, and competitiveness.
- Attractiveness to sustainability-oriented investors and talent.
- Incentives for innovation and improved access to finance.
- For Developing Countries:
- Enhanced protection of human rights and the environment.
- Sustainable investment, capacity building, and support for value chain companies.
- Adoption of international standards and improved living conditions.
- For Citizens:
- Applicability:
- The directive applies to:
- Large EU limited liability companies and partnerships (approximately 6,000 companies) with over 1,000 employees and a net turnover exceeding EUR 450 million worldwide.
- Large non-EU companies (approximately 900 companies) with a net turnover exceeding EUR 450 million within the EU.
- The directive applies to:
In summary, the CSDDD represents a crucial step toward promoting sustainability, accountability, and responsible business practices across the EU and beyond.
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