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Are You Ready for the Corporate Sustainability Due Diligence Directive?
Thursday, October 3, 2024

The Corporate Sustainability Due Diligence Directive (CS3D) aims to foster sustainable and responsible corporate behavior in companies’ operations across their global value chains. This is to ensure adverse human rights and environmental impacts are scoped and addressed both inside and outside Europe. The harmonised legal framework in the EU seeks to create legal certainty and a level playing field for companies operating in the EU.

Member States have to transpose the Directive into national law by July 26, 2026 with the first group of in-scope companies conforming by the rules by July 2027. The CSRD also requires each Member State to set up complaint procedures and reporting mechanisms, as well as the introduction of a fault-based liability regime in case of intentional or negligent failure to comply. Companies need to establish a due diligence process to comply with the directive or face civil liabilities for noncompliance.

The Interplay with National French and German Laws

Both France and Germany have existing regulatory requirements covering global value chains namely, France’s Law on the Duty of Vigilance (Loi sur le devoir de vigilance) and Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz) (LkSG). The existing requirements under both French and German national law will need to be unified with the CSRD framework.

Companies meeting CS3D thresholds need to monitor national developments to ensure they will meet both CSRD and national legislation where there are differing requirements, and that they have implemented compliant processes before they are in-scope.

If you have any uncertainties around the Directive or the differences between the CSRD, Duty of Vigilance or LkSG our full insight looks in detail at the obligations and offers advice for companies in making this transition in the due diligence processes.

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