The Corporate Sustainability Due Diligence Directive expert briefing

The Corporate Sustainability Due Diligence Directive (CSDDD) was adopted on 24 May 2024 and was published in the Official Journal of the EU on 5 July. This means the law will enter into force 20 days later on 26 July, and will apply to companies from 2027.

CSDDD will have a seismic effect on many companies, requiring those in-scope to conduct due diligence to identify, prevent and mitigate the adverse environmental and human rights risks and impacts of their business operations and supply chains. It will also require companies to adopt and implement a net zero transition plan in line with the 1.5°C target in the Paris Agreement.

While this law is primarily targeted at large European Union companies it will also impact certain non-EU companies operating in the Union meeting specific turnover and employee thresholds. 

Companies that fail to comply could see themselves facing large regulatory fines with a maximum level of no less than 5% of the company's net worldwide turnover in addition to potential civil claims.

The transition to compliance with the CSDDD will undoubtedly present challenges, but it also offers opportunities for companies to demonstrate leadership in sustainability and responsible business conduct. By proactively addressing environmental and human rights issues, companies can enhance their reputations, build trust with stakeholders, and potentially gain a competitive advantage.

For a deeper dive into the specifics of the CSDDD and how it may impact your business, we invite you to read our expert briefing here, which answers FAQs, including:

• what are the key obligations under the CSDDD?
• which companies are in scope?
• when will the new rules apply?
• what are the risks of non-compliance?