Governance Briefing — November 30, 2022

Executive briefing: On 30 November 2022 the Council of the European Union adopted its general approach for negotiating the Corporate Sustainability Due Diligence Directive (CSDDD). The position adjusts company scope thresholds, clarifies directors’ obligations, and introduces transition periods to help companies implement due diligence and climate planning requirements.

Key refinements

Scope changes. The Council raised the turnover threshold for non-EU companies to €300 million generated in the EU and introduced a delayed application for high-impact sectors.
Director duties. Member states may choose how to enforce directors’ oversight of due diligence, focusing on integrating sustainability into corporate strategy rather than prescribing remuneration links.
Transition periods. The approach staggers application over two to four years depending on company size and sector, allowing more time to stand up due diligence systems.

Implications for boards

EU companies. Boards must plan phased implementation, prioritising high-risk value chains and aligning oversight structures with national enforcement models.
Non-EU groups. Enterprises with large EU turnover need to reassess whether the revised thresholds bring subsidiaries or groups into scope and prepare for supervisory engagement.
Public sector buyers. State-owned entities should track Council-negotiated timelines to adjust procurement criteria and supplier due diligence requirements.

Action checklist

Update CSDDD implementation plans to reflect Council-staged application dates and revised thresholds.
Engage with national authorities on how director oversight obligations will be transposed and enforced.
Prioritise high-risk supply chains for early due diligence capability building and remediation planning.

Sources

Zeph Tech advises EU and multinational boards on sequencing due diligence, governance, and climate planning in line with the Council’s negotiating position.