News on the Corporate Sustainability Due Diligence Directive

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The European Parliament and the European Council reached a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD) as part of the trilogue procedure on 14 December 2023. The directive is primarily intended to help improve corporate governance practices. The aim is to better integrate risk management and procedures to minimise risks relating to human rights and environmental impacts, including risks from value chains, into corporate strategies. The final version of the directive has not yet been published in the Official Journal of the EU.

Categories of companies affected

     
  I. Large EU companies with limited liability
  • Companies with more than 500 employees and a worldwide net turnover of more than EUR 150 million,
  • Companies with more than 250 employees and a worldwide net turnover of more than EUR 40 million that are active in defined high-risk sectors such as textiles, agriculture and mineral extraction.

  

 

     
 

II. Non-EU companies

Non-EU companies operating in the EU with the turnover thresholds described above. For this category of companies, the rules apply three years after the Directive comes into force.

  

 

     
 

III. SMEs

Micro-enterprises and SMEs are not affected by the proposed regulations. However, the proposals contain supportive measures for SMEs, which may be indirectly affected.

  

 

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German Supply Chain and EU Directive

Quick reminder: The German Supply Chain Act has applied to companies with more than 3,000 employees since 2023 and to companies with more than 1,000 employees from 2024. The company's net turnover is not covered by the requirements for the scope of application.

The planned supply chain directive at EU level is intended to establish binding, transnational regulations in order to live the community of values of the European internal market in a sustainable and standardised manner and to actively pursue the protection of human rights and the environment in the supply chain.

The scope as well as the corporate due diligence obligations are increasing - in future, not only "Tier 1" (main supplier) and indirect suppliers, but also companies along the entire value chain, i.e. also "downstream" (downstream), are to be considered.

There are still differences to the LkSG (Lieferkettensorgfaltspflichtengesetz) with regard to the consequences of non-implementation. These are to be enforced through

  • administrative monitoring,
  • fines of up to five per cent of net turnover and
  • civil liability.

The directive also stipulates that compliance with the CSDDD can be used as a criterion for awarding public contracts and concessions.

More detailed information can be found here:

What can you as a company do?

Check to what extent your company could be covered by the scope of the Corporate Sustainability Due Diligence Directive!

Keep up to date with the latest developments and the status of CSDDD implementation in national law: Use the information and handouts from the Federal Office of Economics and Export Control (BAFA), for example.

 

Would you like to find out more or would you like advice for your specific case? Then please do not hesitate to contact us.

 

🖊️ Text: Olga Schmidt
Dr Denise Ott

Your contact person
Dr Denise Ott

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