European Union: Member states have reached agreement on Corporate Sustainability Due Diligence Directive

In brief

EU member states support narrower scope

After long and tough discussions, EU ambassadors adopted a new compromise proposal on the Corporate Sustainability Due Diligence Directive (CSDDD) in Brussels on 15 March 2024. Now the measures are likely to pass into law. The next step is for the Parliament to give its approval.


Key highlights

1. Size thresholds

Based on the information available, the new agreement significantly narrows the scope, excluding almost 70 % percent of companies originally in scope of the draft CSDDD as agreed upon between the European Parliament and Council of Ministers in December 2023.

The size thresholds for companies subject to the updated CSDDD have been adjusted:

  • Number of employees: From 500 to 1000.
  • Turnover: From EUR 150 million to EUR 450 million.

2. Phased implementation

The implementation will be phased in over the coming years:

  • Companies with over 5,000 employees and a turnover exceeding 1.5 billion must comply within three years.
  • Companies exceeding 3,000 employees and a turnover above 900 million will have four years to adjust.
  • Companies with more than 1,000 employees and a turnover exceeding 450 million will be granted the longest application period of five years to comply.

3. Relationship with CSRD

The prevent action plans required by the updated CSDDD will be similar to those under the Corporate Sustainability Reporting Directive (CSRD) to avoid redundancy. Companies already complying with CSRD reporting will not need a separate climate transition plan under CSDDD.

4. Relationship with the LkSG

We will share with you a detailed analysis of the needed amendments to the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) once the EU Parliament has adopted the CSDDD.

As always, your dedicated team at Baker McKenzie remains committed to keeping you informed about legal developments that may impact your business. Should you have any questions or require further clarification on these updates, please do not hesitate to contact us.

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