Corporate Sustainability Due Diligence Directive (2022/0051/COD)

Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937.

Corporate Sustainability Due Diligence Directive (2022/0051/COD)

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Requirements introduced by legislation

  • Assessment of the risk of adverse impacts on human rights, the environment, and good governance associated with operations and business relationships.
  • Prevention and mitigation of adverse impacts identified in the risk assessment.
  • Verification of the effectiveness of the measures to prevent and mitigate adverse impacts and to assess the accuracy of disclosures.

Who must comply

  • The directive would apply to large companies, including listed EU companies and non-listed EU companies with more than 1,000 employees and a net turnover of €450 million.
  • Non-EU companies with a turnover in the EU of at least €450 million.
  • Companies that do not reach the turnover threshold but that are the ultimate parent company of a group.

Key law specifications

  • The due diligence process would need to be adapted to the size and complexity of the company and the nature and context of its operations.
  • Reporting of the steps taken to identify, prevent, mitigate, and account for the actual and potential adverse impacts of the operations and business relationships.
  • Contribution to effective remediation mechanisms for actual or potential adverse impacts.

Penalties for non-compliance

  • The Directive emphasizes that any sanction for non-compliance must be proportionate.
  • In cases of identified non-compliance, investigating public authorities are directed to grant the company an appropriate period to rectify the failure before imposing sanctions, underlining a commitment to remedial action.
  • While the Directive specifies a limited set of sanctions applicable across Member States, it empowers each state to tailor enforcement processes in accordance with their national law. Pecuniary sanctions, when applied, are mandated to be proportionate to the company’s turnover.

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Timeline for its entry into force and compliance

From 2029

Entry into force for small companies

All the remaining companies within the scope of the directive (including those over 1,000 employees and worldwide turnover higher than €450 million).

From 2028

Entry into force for medium companies

Firms with over 3,000 employees and a €900 million worldwide turnover.

From 2027

Entry into force for big companies

Companies with over 5,000 employees and worldwide turnover higher than €1,500 million.

July 2024

Publication in the Official Journal

The directive is formally endorsed by the Council, signed and published in the EU Official Journal.

April 2024

Parliament gives the final green light to the CSDDD

The European Parliament approved the new Due Diligence Directive, agreed on with the Council.

March 2024

EU Council approves the Due Diligence Directive

The Council approves a softened version of the legislative text.

December 2023

Provisional agreement reached between Parliament and Council

After inter-institutional negotiations, a provisional agreement is reached between the European Parliament and the Council.

April 2023

JURI Committee adopts report with key amendments

The JURI Committee adopts its report on the proposal, introducing significant amendments.

November 2022

Rapporteur publishes draft report

The rapporteur releases the draft report, and eight Parliament committees offer their opinions.

February 2022

Adoption of the proposal by the European Commission

The European Commission releases a legislative proposal for a Directive to enhance responsible corporate behavior in global value chains.

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