Policy Briefing — EU Corporate Sustainability Due Diligence Directive Proposal

Executive briefing: On 23 February 2022 the European Commission adopted the Corporate Sustainability Due Diligence Directive (CSDDD) proposal. It would require large EU companies, and certain non-EU companies with significant EU turnover, to identify, prevent, end, or mitigate adverse human rights and environmental impacts across their operations and value chains, with directors responsible for overseeing due diligence and adopting climate transition plans.

Key provisions

Scope thresholds. EU companies with over 500 employees and €150 million worldwide turnover fall in scope, alongside a second tier of high-impact sectors above 250 employees and €40 million turnover.
Due diligence duties. Companies must integrate due diligence into policies, identify actual and potential impacts, prevent or mitigate impacts, establish complaints procedures, and monitor and publicly communicate on due diligence.
Climate transition plan. Directors must adopt a plan ensuring the business model and strategy are compatible with the Paris Agreement’s 1.5°C objective, with variable remuneration linked to climate targets for in-scope companies.

Implications for boards

EU multinationals. Boards must assign responsibility for due diligence programmes, define escalation protocols, and oversee remediation.
Non-EU groups. Companies active in the EU must map supply chains and governance structures that allow compliance with EU supervisory authorities and potential civil liability.
Public procurement bodies. State-owned enterprises and public buyers will need to ensure supplier due diligence compliance when awarding contracts.

Action checklist

Conduct gap analyses comparing existing responsible sourcing programmes to CSDDD due diligence steps.
Develop climate transition plans with science-based targets, board oversight schedules, and progress reporting.
Prepare grievance mechanisms, remediation workflows, and contractual clauses covering tier-one and downstream partners.

Sources

Zeph Tech supports companies in designing governance, risk, and remediation frameworks that satisfy the CSDDD proposal and forthcoming supervisory expectations.