CSDDD: Everything you need to know about the European Duty of Vigilance Directive

The CSDDD (Corporate Sustainability Due Diligence Directive), adopted by the European Parliament on April 24, 2024, is a major step towards more responsible corporate behavior with regard to human rights and the environment. This directive complements French law n°2017-399 on duty of care, offering an ambitious European framework to foster more sustainable practices.

What is CSDDD?

The CSDD requires companies to implement measures to prevent human rights violations and negative environmental impacts at all stages of their value chain. This directive goes beyond national frameworks by making due diligence mandatory for a large number of economic players, both within and outside the EU.

To comply with this directive, companies will have to :

• Integrate sustainability vigilance into their internal policies.
• Identify actual or potential negative impacts on human rights and the environment.
• Prevent or mitigate these impacts, and end or minimize actual impacts.
• Evaluate the effectiveness of their actions and vigilance policy.
• Publish a due diligence report via a sustainability report or on their website.

Companies will be supported in this process by sector-specific information sheets and help desks in each member state.

Who does CSDDD concern?

The companies concerned are :

• EU companies with more than 500 employees and sales of more than 150 million euros, or more than 250 employees and sales of more than 40 million euros for high-risk sectors (fashion, minerals, agriculture)(Plan A policy factsheet...).
• Companies operating a franchise or license model with high royalty thresholds.

• Non-European companies generating sales of over €150 million in the EU or operating in high-risk sectors with sales of over €40 million (Plan A policy factsheet...).

In all, some 13,000 companies inside and 4,000 outside the EU are directly affected by this directive. Although SMEs are not directly affected, they may be indirectly impacted as subcontractors or suppliers to large companies.

What's the timetable for implementation?

• 2024-2026: Member States have two years to incorporate the directive into national law.
• 2026-2027: Progressive application of the CSDDD.
• 2027 to 2029: Staggering of affected companies by size and sales, from those with over 5,000 employees down to those with over 1,000.

How to prepare?

To anticipate this new directive, here are the main points to follow:

• Data collection and monitoring: Ensure that the necessary information is available for the entire supply chain, particularly with regard to environmental and social risks.
• Involve suppliers: Subcontractors and suppliers must be involved in the process.
• Leveraging sustainability platforms: Using digital tools to comply with new requirements and develop an integrated ESG strategy.

What are the penalties for non-compliance?

Sanctions may include :

• Fines of up to 5% of worldwide net sales.
• Name and shame: Non-compliant companies could be publicly denounced.
• Compensation for victims of breaches of due diligence.
• Exclusion of non-European companies from European public procurement markets (Plan A policy factsheet...).

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