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EU adopts landmark corporate sustainability due diligence rules

The EU Council has officially adopted the corporate sustainability due diligence directive, marking the final step in its legislative process in terms of the new Corporate Sustainability Reporting Directive (CSRD). This new directive imposes stringent obligations on large companies to address adverse impacts on human rights and environmental protection. These rules extend beyond their operations to include subsidiaries and business partners throughout their activity chain.

280524_EU-adopts-landmark-corporate-sustainability-due-diligence-rules_A picture of the French Alps in France during the spring season_news_visual 1A picture of the French Alps during the spring season. AI generated image.

Large companies are now required to play a pivotal role in the transition to a greener economy and enhanced social justice. The directive empowers authorities to sanction entities failing to meet these obligations, representing a significant move towards a more sustainable and equitable world.

Pierre-Yves Dermagne, the Belgian Deputy Prime Minister and Minister of the Economy and Employment, emphasised the directive's importance, highlighting its potential to create a better living environment for everyone.

Read more: What is CSRD and how does it affect your business?

The directive targets companies with over 1,000 employees and a turnover exceeding €450 million. These firms must implement risk-based systems to monitor, prevent, or remedy identified human rights or environmental damages. Compliance will involve measures to prevent, mitigate, or address adverse impacts from their operations, subsidiaries, and business partners. Companies will be liable for any damages and required to provide full compensation.

Additionally, companies must develop a climate transition plan aligned with the Paris Agreement on climate change. Following the Council's approval, the directive will be signed by the Presidents of the European Parliament and the Council, published in the Official Journal of the European Union, and come into force 20 days post-publication.

Read more: Germany streamlines corporate sustainability rules: CSRD implementation welcomed

Member states have two years to adopt the necessary regulations. The directive will be phased in based on company size, starting with those having over 5,000 employees and €1,500 million turnover, down to those with over 1,000 employees and €450 million turnover over a five-year period.

This directive, proposed by the Commission on 23 February 2022 and adopted by the Council on 1 December 2022, marks a significant milestone in corporate responsibility and sustainability.

Download DGB’s CSRD brochure

At DGB Group, our commitment to sustainability is comprehensive, shaped by our extensive experience working with top institutions and organisations globally. This background emphasises our dedication to developing impactful and verified carbon projects that provide advantages for all stakeholders. As we progress toward a more sustainable future, it is essential for companies to integrate sustainability into their strategic frameworks to align with the new Corporate Sustainability Reporting Directive (CSRD). This approach not only drives their growth but also improves the planet's health and societal wellbeing. By collectively committing to sustainability, we strive to create a world where economic growth, social welfare, and environmental conservation are interconnected and mutually beneficial.

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