EU: Due Diligence Directive agreed

EU Ministers have eventually agreed a draft for the proposed Corporate Sustainability Due Diligence Directive (CSDDD). The directive will not impact member companies for another four to five years, allowing time for other pressing issues.

Why it matters: The CSDDD aims to ensure corporate sustainability, with a focus on companies with significant employee count and turnover. It covers various industries, including franchising agreements. Awareness and compliance with this directive will be important for businesses within the EU.

By the numbers: The directive applies on a phased basis: starting from 2028 for companies with over 5000 employees and €1,500 million turnover, 2029 for those with over 3000 employees and €900 million turnover, and 2030 for those with over 1000 employees and €450 million turnover.

The big picture: The scope of the directive is limited to larger companies, treating all industries equally. Disposal of products is no longer included, but transport, storage, and distribution activities are covered. Some climate change and civil liability provisions have been amended or deleted.

What they're saying: BusinessEurope Director General, Markus J. Beyrer, expressed regrets about the unresolved issues of the directive, such as harmonization, definitions, enforcement, and liability provisions. He urged EU decision-makers to address these concerns before final adoption.

What's next: The final adoption of the directive will follow the EU Parliament elections in June where many outstanding concerns and considerations may be addressed.