What you will find
The CSDDD has narrowly made it through into the EU’s upcoming regulatory framework in an effort to hold organizations accountable for the entirety of their value chain’s impact.
The CSDDD (Corporate Sustainability Due Diligence Directive) has recently made headlines as the EU member states narrowly passed it through into the upcoming sustainability regulatory framework of the territory.
Although it has significantly changed in some very relevant aspects regarding what was first intended, it is still crucial for organizations to understand what is at stake and what needs to be done in order to adhere to this upcoming directive.
The CSDDD is one of the latest additions in the European Union’s effort to transform its economy to one that’s completely based upon sustainable principles and business practices. The Due Diligence Directive is indeed a great step forward in this journey.
The latter centers upon human rights and environmental protection throughout the entirety of the value chain of organizations and businesses, holding them accountable to a degree never known before in the union. Let’s take a look at this new regulation:
The CSDDD scope and application
The first question every organization may be asking itself is whether the regulation actually affects them or not, this is, what is the CSDDD’s scope and application?
Although in its first draft, which was not approved nor passed by all EU member states, the scope and application was significantly larger, some adjustments where made since in order for the directive to actually be accepted onto the upcoming regulatory framework. In this regard, the CSDDD applies to:
- Companies with a 1000 or more employees and a net worldwide of more than 450 million euros.
- Companies with a significant turnover within the EU, including non-EU companies that meet the criteria.
Engage employees in the sustainability strategy
The fact that the directive is applicable for both EU and non-EU companies is testament to the Union’s intention to permeate the CSDDD’s approach throughout global value chains. In fact, as much as the directive is solely directed towards big enterprises, medium and small enterprises that work for or with the latter will also have to be more transparent and ambitious regarding their ESG impact.
The due diligence directive's key characteristics
Moving on from the scope to perhaps the most relevant features and characteristics of the Corporate Sustainability Due Diligence Directive; let’s take a look:
DUE DILIGENCE
As the name CSDDD itself suggests, due diligence obligations are at the heart of the regulation itself, in particular those concerning human rights and environmental impact. This means organizations need to identify as well as prevent or mitigate the many negative impacts within their practices or operations, including all subsidiaries and partners across the value chain. This may include issues such as labor rights in the supply chain or environmental degradation.
LIABILITIES
This feature is particularly important, as the CSDDD not only requires companies to comply with the regulation, but actually imposes liabilities to non-compliant organizations. But beyond this, the regulation also requires companies to develop mechanisms or tools of remediation in order to not be held accountable and liable to due diligence violations.
PUBLIC DISCLOSURE
Another primary trait of the CSDDD is that of its enhanced reporting transparency. In this regard, companies are required to publicly disclose their due diligence actions and keep stakeholders adequately informed about how they mitigate or prevent adverse impacts, and how they further help promote sustainability.
How the CSDDD impacts businesses
The CSDDD will bring brilliant developments for companies’ approaches to sustainability and their responsibility beyond just direct impacts, by requiring businesses to look deeper into their value chains.
But, of course, this means organizations will need to step up their game and change their ways in order to comply with the regulation. Here are some ways in which the CSDDD may impact your business:
- Making sustainability part of the company strategy: to some this may seem rather obvious, but even so, it is a necessary outlook to have on how to approach corporate sustainability; in fact, under the CSDDD is a compulsory requirement to align business practices and policies with sustainability goals.
- Strengthening risk assessment and management mechanisms: the due diligence directive makes it a central requirement to identify, mitigate and prevent risks related to human rights and environmental degradation.
- Readjusting corporate operations: many organizations will have to readjust certain operational tasks such as revising suppliers compliance with sustainability requirements, providing more transparency into their practices or simply adopting a more sustainable mindset overall.
Guide to current and upcoming EU laws, rules and regulations
Engage employees in the sustainability strategy
In DoGood, we aim to simplify the complex web of sustainability objectives for companies by offering a platform that translates the high-level ESG (Environmental, Social, Governance) objectives into actionable tasks for every single employee.
Then, each employee not only knows how to make an impact but also feels empowered to contribute meaningfully to the greater sustainable strategy.
No more vague directives. No confusion. DoGood automates the process, making it seamless for the workforce to know precisely what steps to take.
