CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD) provides a legal framework for large companies to assess and take action on sustainability-related risks and impacts in their chain of activities. The directive's goal is to provide a structured approach for companies to recognize, evaluate, and respond to negative environmental and human rights impacts linked to their business activities and relationships. 

SCOPE OF CSDDD

The Corporate Sustainability Due Diligence Directive (CSDDD) differs from the Corporate Sustainability Reporting Directive (CSRD) in the geographic reach of companies that each directive aims to cover. While the CSRD is an EU-based directive that applies to companies headquartered within the European Union, as well as EU subsidiaries of foreign-based companies, the CSDDD not only applies to companies based in the EU, but also extends to non-EU companies that sell goods or services on the European market. 

The CSDDD will be obligatory to companies that have a net turnover of over 450 million euros, and more than 1,000 employees. For non-EU companies, the net turnover of 450 million euros is only required for their activities on the European market. 

UNDERSTANDING THE CSDDD

The CSRD reporting standards will help companies to better measure and manage their exposure to Environmental, Social and Governance (ESG) related risks and become better corporate entities by measuring, disclosing, and managing the sustainability impacts they create. It covers:

• Environmental – climate change, pollution, water and marine resources, biodiversity and ecosystems, and circular economy.

• Social – diversity and inclusion, human rights, working conditions, health and safety, employee relations, pay gaps, related rights, workers in the value chain, affected communities, consumers and end-users.

• Governance – policies, risk management and internal controls, ownership and structural transparency, independence and oversight, responsible business practices, ethics, anti-corruption and executive pay fairness.