Agreement reached on the CSDDD
15 Mar 2024
On 15 March 2024, an agreement was reached among EU member states regarding the Corporate Sustainability Due Diligence Directive (CSDDD). This agreement follows extensive negotiations between the European Commission, the EU Council, and the European Parliament. Initially, a preliminary agreement on the directive was reached in December of last year. However, in January, Germany’s unexpected about-turn led to firm opposition to the directive. This also enabled France and Italy to delay the approval process by requesting last-minute alterations and demonstrating wavering commitments to the agreed deal.
One of the main changes concerns the scope of the companies covered by the directive. By increasing the employee threshold from 500 to 1,000 and the turnover threshold from €300 million to €450 million, the directive now applies to approximately 5,421 companies, i.e. only a third of the companies concerned by the initial proposal. Consequently, it’s expected that there will be a significant reduction in the number of companies covered by the legislation in Germany, France, and Italy.
In addition, the latest draft eliminated civil liability provisions that would have enabled trade unions to take legal action against non-compliant firms. This was a measure that faced opposition from countries such as Finland.
While these developments are significant, the final decision rests with the Members of the European Parliament, who are yet to vote on the rules. April is the last opportunity for them to do so before the June elections.
As the CSDDD nears the final stages of approval, it is increasingly imperative for companies which fall within its scope to begin working on its implementation in dialogue with their legal department. It’s worth noting that even companies not directly in scope of the directive may experience its impact if they are involved in the value chain of a company subject to its provisions. In fact, some EU countries have already introduced corporate sustainability due diligence legislation such as France and Germany. Belgian companies trading with large French or German corporate customers may already be confronted with specific new demands and additional contractual obligations.
We’re here to address any questions or concerns you may have on this topic. Our team will be happy to provide tailored advice to suit your specific circumstances.
Stay tuned to find out how the European Parliament will now go about the final approval stage.
Pierre Queritet, Quinten Smits, Jessica De Bels
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