Overview
The EU Directive on Corporate Sustainability Due Diligence (CSDD) mandates large companies to integrate environmental and human rights due diligence into their business practices. This directive requires corporations to identify, prevent, and address adverse impacts within their operations and across their supply chains. By enforcing these standards, the CSDD aims to create a more sustainable and equitable global economy, ensuring companies’ actions align with long-term environmental and social objectives.
For corporate leaders, compliance with the CSDD means establishing robust risk management, stakeholder engagement, and transparent reporting on human rights and environmental impacts.
Key Compliance Requirements for Companies
1. Risk-Based Due Diligence Process
Companies under the CSDD are required to map and assess potential human rights and environmental risks within their own operations and those of their supply chains. This includes prioritizing severe and likely impacts, setting up mitigation strategies, and, where necessary, providing remedies. This risk-based approach allows companies to focus resources on high-risk areas and address adverse impacts more effectively.
2. Climate Change Transition Plan
Corporations must develop a climate transition plan, setting time-bound targets and actions to align business strategies with climate neutrality goals outlined in the Paris Agreement. This transition plan includes SCOPE 1, 2, and 3 emissions tracking, decarbonization targets, and measures to meet EU climate commitments, strengthening corporate resilience and sustainability.
3. Engagement and Transparency
The CSDD requires companies to engage meaningfully with stakeholders, maintain a complaints procedure, and report on their due diligence actions in alignment with the Corporate Sustainability Reporting Directive (CSRD). Transparent, data-driven reporting strengthens corporate accountability, enhancing trust among investors, customers, and regulatory bodies.
For corporations, the CSDD establishes a harmonized framework that enables responsible sourcing, reduces operational risks, and fosters resilience in global value chains. Learn more about the directive:
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