A summary of the EU Corporate Sustainability Due Diligence Directive

Here’s a note from Tom Carr:

A great summary of the implications of the CSDDD out today from the Grantham Research Institute on Climate Change & the Environment. It highlights, five features of CSDDD, but it’s 3 of them that really strike me as potential game changers for companies:

1. Obligation to “adopt and put into effect” Paris-aligned climate transition plans. It’s early days, but if this is applied and enforced in the way the directive suggests, this is going to require companies to invest heavily in creating and implementing proper, rigorous, market-tested transition plans – and have their success judged on continued profitability through the transition, not just decarbonisation.

2. Right for affected people to bring civil liability cases against companies failing to meet the requirements of the directive to protect human rights and the environment. Whilst this is technically already possible, this puts much greater focus on the actual success of due diligence programmes – and will ramp up the litigation risks for businesses.

3. CSDDD does put in protections for smaller suppliers caught in the value chain of big corporates. But there is no two ways about it – smaller, private companies are going to face a whole lot more scrutiny, and be pushed to do much more by their large corporate customers than they are used to. It’s going to require a lot of work.