On Friday 15th March the Corporate Sustainability Due Diligence Directive (CSDDD) was adopted. After several attempts by the Belgian Presidency of the Council of the EU to put the CSDDD on the Council agenda, it became clear that more compromises would be required than those achieved in the provisional agreement reached on the 14th December 2023 by the Spanish Presidency of the Council of the EU.
Both the initial requirements and the number of companies in the scope of the directive have been significantly reduced. The Commission’s initial proposal was set to cover approximately 13,000 companies across the EU; whereas the current agreed text by the Council would apply to around 5,500 companies. Although SMEs are not in the scope of the directive, they will be affected due to the trickle-down effect of the due diligence reporting requirements of companies whose supply chain they are a part of. In addition, EU companies may be at a competitive disadvantage when compared with global competitors who will not have to comply with the directive.
While the transposition of the CSDDD has now been changed to take place over a longer period depending on the companies’ size, there are still issues with regards to the administrative burden that the CSDDD will produce.
EFB has previously called for a more simplified implementation of the CSDDD by possibly creating a certification of suppliers and the creation of a safe harbour solution for European Companies. This would not only help to reduce administrative burden but also the costs associated with the implementation of the CSDDD. It is important that this crucial legislative proposal is implemented properly to ensure that it can achieve the important goals it sets but also ensuring that businesses can remain competitive.