The European Parliament has greenlit a somewhat diluted version of the Corporate Sustainability Due Diligence Directive (CSDDD), mandating that companies, along with their upstream and downstream partners, take measures to mitigate adverse impacts on human rights and the environment. The directive entails adherence to the six steps outlined in the OECD Due Diligence Guidance for Responsible Business Conduct, accessible here. The image below, excerpted from the OECD document, illustrates these six steps.
This directive will apply to both EU-based companies and non-EU entities meeting specific thresholds within the EU, as follows:
- Beginning in 2027, it applies to companies with over 5000 employees and a worldwide turnover exceeding 1500 million euros.
- From 2028, it extends to firms with over 3000 employees and a worldwide turnover of 900 million euros.
- By 2029, all remaining companies falling within the directive's scope, including those with over 1000 employees and a worldwide turnover surpassing 450 million euros, must comply.
Non-compliance with the directive will result in public identification and potential fines of up to 5% of the company's turnover. While a positive step forward, it falls short of meeting broader expectations.
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