Today, EU member states in the European Council announced their consensus on a significant legislative milestone, establishing mandatory requirements for businesses to address their adverse impacts on human rights and the environment. This follows a negotiation process that led to a considerable reduction in the scope of the proposed law and a delay in its implementation.
The compromise reached is seen as potentially salvaging the corporate sustainability due diligence directive (CSDDD), which faced obstacles in previous months. Initially proposed by the European Commission in February 2022, the CSDDD aims to hold companies accountable for identifying, assessing, and mitigating their impacts on people and the planet throughout their supply chains.
The directive faced challenges in gaining approval from the Council, with concerns raised by several member states regarding its bureaucratic implications and legal ramifications for companies. Following amendments to the text and discussions on thresholds, the directive’s coverage was notably scaled back, with thresholds for inclusion raised to 1,000 employees and a revenue exceeding €450 million.
Other adjustments include a phased implementation timeline, exemptions for certain activities, and the removal of obligations related to climate transition plans. Despite these changes, the core principles of the directive remain intact.
The revised CSDDD will now return to the EU Parliament for consideration of the compromise text, with further deliberations expected in parliamentary committees before a final vote. While the agreement represents progress, criticism has been voiced regarding the prolonged negotiation process and last-minute alterations to the legislation. Nonetheless, stakeholders remain committed to advancing responsible business conduct and environmental stewardship within the EU.
March 15, 2024
