DATE PUBLISHED: MARCH 22, 2024
KEY TAKEAWAYS
- The adoption of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) signals broad consensus on the importance of robust controls to prevent adverse impacts of business activities on people and the environment. Notwithstanding significant concessions on the ambitious proposal presented by the European Commission over two years ago, this regulation will drive the harmonization of sustainability due diligence obligations in the EU and beyond.
- The frameworks underpinning the regulation are not new. The UN Guiding Principles for Business and Human Rights and a revised OECD Guidelines for Multinational Enterprises were released in 2011 and have since been embedded in government action plans globally, as well as voluntarily endorsed by companies. A significant share of large European companies have incorporated these standards in their sustainability programmes.
- CSDDD is another key component of the EU’s sustainable finance action plan under the Green Deal. The detailed impact-related disclosures under the Corporate Sustainability Reporting Directive (CSRD) prepare companies for the due diligence obligations set out in the new regulation.
