CSDDD Directive: A New Milestone for Corporate Sustainability in the EU

Today marks a major step for corporate sustainability in the European Union! On 25 July 2024, the Corporate Sustainability Due Diligence Directive (CSDDD) officially entered into force, requiring large companies to adopt strict measures to ensure the protection of human rights and the environment throughout their entire value chain.

But what does this new directive really mean, and how will it affect companies?

🏢 What is the CSDDD Directive?

The CSDDD requires large EU companies to carry out full due diligence to identify, prevent, mitigate, and account for their impacts on human rights and the environment. This approach covers all company activities, including subsidiaries and both direct and indirect business partners.

📅 Implementation Timeline

Member States have until 26 July 2026 to transpose this directive into their national laws. From July 2027, the largest companies – those with more than 5,000 employees and €1.5 billion in worldwide turnover – must comply. Smaller companies will have additional deadlines, depending on employee numbers and revenue.

🎯 Key Obligations of the CSDDD

Companies must:

1. Integrate due diligence into policies: Adapt corporate strategies to include sustainability.
2. Conduct regular risk assessments: Identify potential environmental and human rights risks.
3. Prioritise and address significant risks: Implement measures to mitigate adverse impacts.
4. Provide remediation: Offer solutions for any harm caused.
5. Consult stakeholders: Engage all affected parties in transparent dialogue.
6. Maintain grievance mechanisms: Ensure clear channels for filing complaints.
7. Face civil liability: Comply with standards to avoid penalties from national authorities.

📈 Connection with the CSRD

The CSDDD is closely linked to the Corporate Sustainability Reporting Directive (CSRD). While the CSDDD requires companies to proactively manage environmental and human rights risks, the CSRD requires detailed disclosure of sustainability practices and impacts. Together, these directives strengthen corporate accountability and promote transparency.

🌍 Value Chains and Sustainability

Responsible value chain management is becoming a growing priority. Both the CSDDD and other EU initiatives aim to ensure that companies address human rights and environmental issues across their supply chains. This vision strengthens corporate responsibility and fosters a more ethical and sustainable business environment.

At Aliados, we support companies in this transition, providing expert guidance to navigate this new regulatory landscape. Together, we can build a more sustainable and responsible future.

Let’s lead the change and ensure our impact on the world is positive and lasting!