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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: the latest ESG developments
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All 2024 ESG Matters issues
- December 2024: Navigating the hydrogen economy - insights from the Hydrogen Guide
- November 2024: Hague Court of Appeal denies climate case against Shell
- October 2024: ESG Matters: The European Green Bond Standard - Dutch implementation act
- September 2024: M&A interactions with CSRD reporting
- July 2024: The Nature Restoration Law - what will it mean?
- June 2024: A new EU regulatory framework for ESG rating providers
- May 2024: Linking real economy and financial institutions’ transition plans
- April 2024: European Court rules that Switzerland’s climate inaction violates human rights
- March 2024: Where are we heading with the CSDDD?
- February 2024: Extending and strengthening the Emissions Trading System (EU ETS)
- January 2024: the Belgian climate case (Klimaatzaak)
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Key contacts
- Frans van der Eerden | partner Financial Law. Focus on financial regulatory & sustainability
- Maartje Govaert | partner Employment & Pensions. Focus on the social pillar of ESG (employment law matters)
- Harm Kerstholt | partner Corporate M&A. Focus on Energy, ESG Due Diligence, and human rights
- Iris Kieft | partner Public & Regulatory. Focus on public regulatory, energy, climate change and the circular economy
- Suzanne Kröner-Rosmalen | counsel Corporate Governance. Focus on ESG disclosures and strategy
- Jens Mosslmans | partner Public Law & Regulatory | Focus on energy transition and public regulatory
- Geert Raaijmakers | partner Corporate Governance. Focus on sustainable corporate governance
- Freerk Vermeulen | partner Dispute Resolution and head of the Supreme Court Litigation Team. Focus on climate litigation and sustainability strategy
- David Wumkes | partner Real Estate & Infrastructure | Focus on real estate, substainability and energy projects
Meet the whole Sustainable Business & Climate Change team
Editors: Kim Heesterbeek, & Dorine Verheij