ESG Matters: Where are we heading with the CSDDD?

Update
08.03.2024
In this month’s ESG Matters, we take a special look at the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). Our spotlight keeps you up to date with February’s key developments in ESG governance, disclosure and litigation.

Highlight:

  • Where are we heading with the CSDDD?

    In our February update, we informed you that the Corporate Sustainability Due Diligence Directive (CSDDD) was moving towards its final stages. It was expected that the final vote on the final text would take place in April 2024. What a difference a few weeks can make!

    In the course of February, it appeared that the vote on the Directive would be postponed. This was primarily because Germany and Italy had announced they would abstain from voting, despite the fact that the European Council and Parliament had reached a provisional agreement on the regulation. On 28 February, the Belgian Presidency of the Council stated that no support had been found at a meeting that day to endorse the proposal for a CSDDD. According to diplomatic sources, France raised additional objections, seeking to reduce the scope of the new rules to only include companies with at least 5,000 employees (instead of 500).

    This leaves market parties and other stakeholders wondering where we are going. The Belgian Presidency of the Council stated: “We now have to consider the state of play and will see if it’s possible to address the concerns put forward by member states, in consultation with the European Parliament.”

    Whether this will be successful remains to be seen, as there is very little time to reach consensus before the final deadline. At the time of writing this update, the Council Presidency is reported to be seeking support for a less stringent version of the CSDDD. This compromise proposal would reportedly include a smaller scope (1,000 employees instead of 500 and EUR 300 million turnover instead of 150 million, and a slower phase-in) and the deletion of the high-risk sector approach, such as that envisaged for the textile industry.

    The proposal was expected to be on the agenda for 8 March. However, it has allegedly been taken off, most likely because more time is required to win the support of the reluctant member states. There is, however, very little time. With European elections in June, the proposal has to be endorsed in principle and sent to the European Parliament before 15 March. If the CSDDD is not adopted, this may lead to further development of national initiatives to provide for due diligence regulations. We will keep you posted.

In the Spotlight:

Related articles

Cookie notification

This functionality uses third-party cookies. Change your cookie preferences to view this content or view more information.
These cookies ensure that the website works properly. These cookies cannot be disabled.
These cookies can be placed by third parties, such as YouTube or Vimeo.
By deactivating categories, it is possible that related functionalities within the website may no longer work properly. It is always possible to change your preferences at a later time. View more information.