The European Council has officially adopted the Corporate Sustainability Due Diligence Directive, marking the final step in the legislative process. This directive imposes new obligations on large companies to address the adverse impacts of their activities on human rights and environmental protection.

Key Provisions of the Directive

• Scope and Applicability: The directive applies to companies with more than 1,000 employees and a turnover exceeding €450 million. It covers the entire chain of activities, from production to distribution.
• Obligations: Companies are required to implement a risk-based system to monitor, prevent, or remedy identified human rights and environmental damages. This responsibility extends to subsidiaries and business partners.
• Liability: Companies can be held liable for damages and must provide full compensation for any violations.
• Climate Transition Plans: Affected companies must adopt climate transition plans in line with the Paris Agreement.

Implementation Timeline

The directive will come into effect 20 days after its publication in the Official Journal of the European Union. Member states will have two years to align their regulations and administrative procedures with the directive. The application timeline varies by company size:

• 3 years for companies with more than 5,000 employees and a turnover of €1,500 million.
• 4 years for companies with more than 3,000 employees and a turnover of €900 million.
• 5 years for companies with more than 1,000 employees and a turnover of €450 million.

Background

The proposal for this directive was submitted by the European Commission on 23 February 2022. The Council adopted its general approach on 1 December 2022, and a provisional agreement was reached with the European Parliament on 14 December 2023.

Statement from ETUC

The European Trade Union Confederation (ETUC) welcomes this directive as a significant advancement towards a greener economy and greater social justice. We support the stringent measures to ensure companies uphold human rights and environmental standards throughout their operations. This directive will help create a more sustainable and equitable future for all.

For further details, please visit the Official Journal of the European Union.