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The Corporate Sustainability Due Diligence Directive (CSDDD) from the European Union represents a major advancement in holding companies accountable for their environmental and human rights impacts. This new law requires companies, regardless of their location, to carry out thorough assessments of their activities, identify potential risks, and take measures to mitigate any negative effects. With enforcement set to begin in 2027, companies need to start preparing to meet these strict standards.
Understanding due diligence
Due diligence is a systematic process that aims to identify, prevent, mitigate, and report any negative human rights or environmental impacts. This covers various issues such as forced labor, child labor, workplace safety, greenhouse gas emissions, pollution, and biodiversity loss. Through due diligence, companies can showcase their dedication to ethical business practices and play a part in building a more sustainable future.
Key objectives of the CSDDD
The CSDDD aims to achieve several key objectives:
- Consistency: ensure that companies across all EU countries adhere to consistent standards for sustainability
- Accountability: hold companies accountable for their social and environmental impacts throughout their entire value chain
- Transparency: increase transparency in corporate practices and reporting
Phased implementation and scope
The CSDDD will be implemented in phases, with larger companies subject to the requirements first:
- 2027: applies to EU companies with over 5000 employees and a global turnover exceeding €1500 million, as well as non-EU companies with an EU turnover over €1500 million
- 2028: applies to EU companies with over 3000 employees and a global turnover exceeding €900 million, as well as non-EU companies with an EU turnover over €900 million
- 2029: applies to EU companies with over 1000 employees and a global turnover exceeding €450 million, as well as non-EU companies with an EU turnover over €450 million
Preparing for compliance
Companies must take proactive steps to ensure compliance with the CSDDD. This includes:
- Integration and compliance: incorporating sustainability into corporate governance and developing clear policies and procedures
- Enhanced standards and data gathering: adopting stricter codes of conduct, conducting thorough risk assessments, and implementing robust data collection systems
- Establishing grievance mechanisms: creating transparent and accessible channels for reporting and addressing human rights and environmental concerns
Candiani’s commitment to promoting corporate sustainability
The CSDDD represents, hence, a significant milestone in the global effort to promote corporate sustainability. By requiring companies to conduct due diligence and address their negative impacts, the directive has the potential to drive positive change and create a more equitable and sustainable world. As enforcement approaches, companies must be prepared to meet these new requirements and demonstrate their commitment to responsible business practices.
We believe that specific legislation is necessary to promote sustainable production and consumption. We are glad that Europe is progressing in this field, but more efforts are needed to decrease the impact of fashion and many other industries. Often, consumers don’t know how to choose a more responsible product. Therefore, we see two options: a massive educational operation or legislation to improve production processes, sales, and distribution of products in the EU. The best scenario is one in which both things happen simultaneously. That’s why we are starting a series of articles highlighting the most important changes in EU regulations in the textile industry.