Policy Briefing — EU Council Adopts Corporate Sustainability Due Diligence Directive
The Council of the European Union formally adopted the Corporate Sustainability Due Diligence Directive on 24 May 2024, imposing phased human-rights, environmental, and climate transition duties on large companies and high-risk value chains.
Executive briefing: On 24 May 2024 the Council of the European Union gave final approval to the Corporate Sustainability Due Diligence Directive (CS3D). The directive compels large EU and non-EU companies active in the bloc to integrate human-rights and environmental due diligence into policies, risk systems, and governance. It also requires climate transition plans aligned with the Paris Agreement.
Key obligations
- Due diligence duty. Companies must identify, prevent, mitigate, and remediate adverse human-rights and environmental impacts across their own operations, subsidiaries, and established business relationships.
- Stakeholder engagement. Article 9 requires meaningful consultation with affected stakeholders and workers when designing due diligence measures.
- Grievance mechanisms. Companies must provide accessible reporting channels and ensure whistleblower protections.
- Climate transition plan. Large companies must adopt plans ensuring business strategy aligns with limiting global warming to 1.5°C, with board-level oversight and variable remuneration linkages.
- Supervision and sanctions. Member States must designate authorities empowered to order remediation, impose fines of up to 5% of global turnover, and exclude offenders from public procurement.
Application timeline
- Transposition deadline. Member States must implement CS3D within two years of publication in the Official Journal.
- Largest companies. Companies with over 5,000 employees and €1.5 billion worldwide net turnover must comply three years after entry into force.
- Mid-tier companies. Companies with over 3,000 employees and €900 million turnover have four years.
- Standard scope. Companies exceeding 1,000 employees and €450 million turnover, and certain franchising/licensing groups, must comply five years after entry into force.
Program actions
- Value-chain mapping. Inventory suppliers and partners, prioritising high-risk sectors (textiles, agriculture, extractives) for due diligence controls.
- Risk management integration. Embed CS3D obligations into enterprise risk management, procurement, and contract management systems, including contractual clauses and audit rights.
- Remediation playbooks. Define escalation, remediation funding, and victim compensation processes that comply with Article 12.
- Climate planning. Update transition plans with science-based targets, interim milestones, and board accountability.
Sources
- Council of the EU — Corporate sustainability due diligence: Council gives final approval
- CS3D — Final compromise text approved by the Council
Zeph Tech harmonises CS3D due diligence, grievance processes, and climate transition planning with CSRD and supplier assurance programmes.
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