On 24 May 2024, the Council of the European Union formally adopted the Directive on Corporate Sustainability Due Diligence (CSDDD).
The Directive was published in the Official Journal of the European Union and entered into force on 5 July 2024. From that date, Member States have two years to transpose it into their national legislation.
The European Coalition for Corporate Justice (ECCJ)—bringing together over 480 NGOs, trade unions, and consumer organisations from 17 countries—welcomed this long-awaited legislative act. The Directive has the potential to significantly transform existing rules and bring about real change in corporate behaviour.
To achieve these goals, both the effective transposition and implementation of the Directive by Member States and a serious commitment from businesses to integrate the new requirements into their practices will be essential.
What is the Corporate Sustainability Due Diligence Directive?
The Corporate Sustainability Due Diligence Directive (CSDDD) is a piece of EU legislation that introduces new legal obligations for companies to respect human rights and protect the environment. This regulatory framework on corporate responsibility requires certain companies to uphold human rights and safeguard the environment throughout their global “chain of activities” (a simplified term for the value chain), by mandating due diligence processes on human rights and environmental risks.
The Directive also introduces specific corporate obligations related to climate change and grants affected individuals the right to bring claims before national courts in EU Member States for harm suffered within the company’s chain of activities.
What is the purpose of this legislation?
Businesses play a key role in the global economy, but they often prioritise private profit over people and the planet. Corporate abuses such as forced labour, union busting, and environmental pollution are widespread and are estimated to affect around 450 million people working in global supply chains, as well as the communities connected to them.
What obligations does the Directive impose on companies to respect human rights and the environment?
Human rights and environmental due diligence is a well-established standard of responsible business conduct, derived from the UN Guiding Principles and the OECD Guidelines for Multinational Enterprises (2023). These international standards clearly define the expectations for companies to respect human rights and follow sustainable practices aimed at protecting the planet.
What must a company do when it identifies adverse impacts in its value chain?
If a company identifies adverse impacts related to human rights or the environment in its value chain, it must take appropriate targeted measures to address them. This usually includes conducting a thorough root cause analysis, developing a remediation or corrective action plan, and monitoring its implementation. These measures should ensure not only the elimination of existing problems but also the prevention of future negative impacts on people and the environment.