In the latest global development on corporate accountability, the European Union has taken a monumental step towards promoting sustainability and ethical business practices with the approval of the Directive on Corporate Sustainability Due Diligence (CSDDD) in March 2024. This directive, once adopted and transposed into national law by EU member states, will usher in a new era of responsibility for companies operating within the EU.
What is the EU’s Directive on Corporate Sustainability Due Diligence (CSDDD)?
The CSDDD is designed to hold companies accountable for their social and environmental impacts by introducing rules for human rights and environmental due diligence throughout their value chains. It aims to ensure that companies identify, prevent, mitigate, and account for adverse human rights and environmental impacts associated with their operations and supply chains.
Who Does CSDDD Apply to?
The CSDDD primarily targets large companies with significant global operations. Specifically, it applies to EU-based companies with 1,000+ employees and a net worldwide turnover of over 450 million EUR, as well as non-EU companies meeting the [IB1] same turnover criteria in the EU. Additionally, franchises with substantial turnovers are also included within the scope of the directive.
What Are the Requirements of CSDDD?
Under the CSDDD, companies are obligated to integrate human rights and environmental due diligence into their policies and processes. They must identify and assess potential impacts, prevent or mitigate adverse effects, and establish procedures for ongoing monitoring and reporting. Compliance entails publishing an annual statement detailing due diligence measures and maintaining a complaints procedure.
CSDDD Timeline and Consequences of Non-Compliance
The implementation of CSDDD will be phased in gradually, starting from 2027 for the largest companies and extending to smaller enterprises over subsequent years. Failure to comply with the directive may result in compliance orders or substantial financial penalties, with fines of up to 5% of a company's net worldwide turnover. It underscores the importance of proactive preparation and adherence to due diligence requirements.
Preparing for CSDDD Compliance
To meet the requirements of CSDDD, companies must implement comprehensive due diligence measures across their entire supply chains[IB2] through a risk-based approach. This includes assessing risks associated with suppliers, sub-suppliers, and other entities in the supply chain. While this may introduce additional complexity, there are no shortcuts when it comes to fulfilling corporate responsibility obligations.
Take the Next Step with Our SCDD Manager Certification Course
IGCC’s Supply Chain Due Diligence Manager Certification Course equips participants with the knowledge, skills, and tools needed to navigate the complexities of SCDD implementation and drive positive change within their organisation.
In light of the EU regulation, our SCDD Manager Certification Course has been updated to include:
✅ Integrating the EU's Corporate Sustainability Due Diligence Directive (CSDDD),
✅ Implementing Responsible Purchasing Practices,
✅ Implementing meaningful Stakeholders' Engagement,
✅ New group exercises and examples based on the latest real-world case studies.
Gain valuable insights, tools, and practical knowledge to navigate the complexities of supply chain due diligence and ensure compliance with evolving regulations. Join us in pioneering ethical supply chains and driving positive change within your organisation and beyond.
➔ For course details and fees, please click here!
➔ To register for our upcoming batch, please click here!
In case of any queries, please write to sustainmarkets@indo-german.com.