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EU Adopts Mandatory Rules on Corporate Sustainability Due Diligence: Implications for Businesses by Sana Abdul Samad

The Corporate Sustainability Due Diligence Directive (CSDDD) recently adopted by the European Parliament marks a significant step towards enhancing corporate responsibility and sustainability. This directive mandates comprehensive due diligence on supply chains, aiming to account for adverse human rights and environmental impacts. These obligations will include formal analysis of the risks and associated controls relating to child labour, slavery, pollution, deforestation, excessive water consumption and damage to ecosystems. Failure to fulfil the obligations could result in civil liability, emphasizing the urgency for companies to incorporate due diligence & traceability in their supply chain. As the directive is set to become legally binding in the near future, it is imperative for companies to take proactive steps to prepare for compliance.

Who will be affected by CSDDD?

The directive is targeted towards two main groups:

Group 1

• EU companies with a net worldwide turnover of €150+ million and 500+ employees
• Non-EU companies with a net turnover of €150+ million in the EU and 500+ employees.

Group 2: (Companies with at least 50% of this turnover generated in 'high impact' sectors)

• EU companies with a net worldwide turnover of €40+ million and 250+ employees
• Non-EU companies with a net turnover of €40+ million in the EU

What Is Required?

Compliance with the CSDDD involves several key obligations:

·????? Integrate due diligence throughout their supply chains

·????? Implement measures to prevent, cease, or minimize adverse impacts

·????? Conduct risk analysis to identify potential impacts

·????? Establish transparent complaints procedures

·????? Publicly communicate on due diligence efforts (reporting)

The CSDDD also mandates companies to adopt and implement a climate transition plan in line with the Paris Agreement's 1.5 degree Celsius target. This plan should include clear, time-bound targets for 2030 and five-year targets up to 2050, with updates required every 12 months to assess progress towards achieving these goals. Furthermore, companies not initially within the scope of the directive but operating within the value chains of affected businesses should anticipate increasing demands for sustainability-related information, contractual obligations, and requests related to climate transition. This underscores the far-reaching implications of the directive on various sectors and stakeholders.

IIn today's world, addressing climate sustainability requirements is a top priority for companies. That's why TRST01? is here to help. We offer comprehensive solutions, including TRST01Chain and Footprint, that make developing and implementing climate transition plans a seamless process. Our plans include setting and tracking time-bound targets, conducting regular progress assessments, and integrating sustainability considerations into business strategies. We also provide tools and resources to help companies meet the increasing demand for sustainability-related information and fulfill contractual and regulatory obligations related to climate transition. By leveraging TRST01? 's expertise and capabilities, companies can confidently navigate the complexities of the CSDDD and proactively address the evolving landscape of sustainability and climate-related challenges.