Corporate Sustainability Due Diligence Directive (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD) is a groundbreaking European Union directive designed to enhance environmental and human rights protections both within the EU and worldwide. It mandates companies to address existing and potential negative impacts on human rights and the environment, covering their own operations, subsidiaries, and especially their supply chains. The CSDDD is a cornerstone of the EU's strategy to promote sustainable business practices and ensure responsible corporate governance on a global scale.

The CSDDD was introduced by the European Commission to hold companies more accountable for their environmental and social impacts. It requires businesses to conduct due diligence in their global supply chains. The directive aims to:

• Protect human rights, such as fair working conditions, workplace safety, and the prevention of child labor.
• Reduce environmental impacts, including CO₂ emissions, resource consumption, and pollutant emissions across supply chains.

Core Requirements of the CSDDD:

1. Risk Assessment: Companies must identify potential risks related to the environment, human rights, and governance within their supply chains.
2. Risk Mitigation Measures: Companies are obligated to take preventive and corrective actions to address identified risks.
3. Reporting: Transparent reports on the outcomes and measures of due diligence must be published.
4. Sanctions: Non-compliance may result in fines or other legal consequences.

The CSDDD will primarily target larger companies and those with high revenue or significant presence in the European market. However, the directive will indirectly affect medium-sized enterprises, as larger companies pass their due diligence obligations down to their suppliers.

Medium-sized manufacturing companies face new challenges under the CSDDD, especially if they are part of global supply chains. While the directive mainly applies to larger companies initially, SMEs are often required to provide reports and data to meet the demands of their business partners.