Last updated: 25 Mar 2024 12:00 Posted in:
The EU Council has finally approved implementation of the delayed Corporate Sustainability Due Diligence Directive (CSDDD), which requires large EU limited liability companies and non-EU companies active in the bloc to evaluate environmental damages and breaches of human rights throughout their value chains, and initiate measures to prevent and eradicate them.
It also imposes duties on directors of the EU companies covered, including setting up due diligence processes and integrating due diligence into corporate strategy. Directors must also take into account the human rights, climate change and environmental consequences of their decisions.
The delay to approving the directive came as the EU made last-minute changes, including narrowing the scope of the companies that fall under it – the employee threshold was raised from 500 to 1,000 employees, and the turnover threshold was raised from €150m to €450m, sparing some 70% of the companies initially anticipated to be affected.
MEP Lara Wolters said: “I’m delighted that a clear majority of Legal Affairs Committee members backed the Due Diligence Directive. It is high time that this legislation is adopted, to stop corporate abuse and to give companies clarity in what is expected of them. I’m looking forward to the plenary vote and confident that it will be adopted swiftly.”
However, Isabella Ritter, EU policy officer at ShareAction, commented: “Today’s vote marks a watershed moment for corporate accountability. Yet the last-minute changes made to appease some member states have substantially reduced the scope of what the CSDDD could have achieved.
“Slashing by more than half the number of affected companies that the legislation will apply to severely undermines its original intentions, failing both people and planet. Additionally, by phasing in the limited measures agreed upon today, we are unlikely to see tangible results for almost a decade, leaving vulnerable workers at risk and jeopardising our planet and its vital ecosystem.”
The directive will now go to the European Parliament for approval.
“Today’s vote marks a watershed moment for corporate accountability. Yet the last-minute changes made to appease some member states have substantially reduced the scope of what the CSDDD could have achieved."
Isabella Ritter, EU Policy Officer, ShareAction