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In depth

Deep dive into the key characteristics of the EU sustainable finance regulation

Corporate Sustainability Due Diligence Directive (CSDDD)

Corporate Sustainability Due Diligence Directive (CSDDD)

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The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) is a proposed Directive by the European Commission to create a transparent framework requiring large companies to undertake due diligence on their own activities and those of their suppliers. The core elements of this duty are identifying, ending, preventing, mitigating, and accounting for negative human rights and environmental impacts in the company’s operations, value chains and subsidiaries.

The CSDDD contains provisions on the consequences of violating its obligations. Sanctions include various actions, such as (i) publicly exposing and condemning, (ii) removing a company’s products from the market, or (iii) imposing fines amounting to at least 5% of the company’s global revenue. Non-EU companies that fail to adhere to these regulations will face a prohibition on participating in the EU’s public procurement processes.

Once the Directive is approved, the EU Member states will designate one or more national supervisory authorities to ensure compliance by companies to this Directive.