The Council of the EU has today now adopted the corporate sustainability due diligence directive. This is the last step in the decision-making procedure. The directive introduces obligations for large companies regarding adverse impacts of their activities on human rights and environmental protection, along with laying down the liabilities linked to these obligations. Pierre-Yves Dermagne, Belgian Deputy Prime Minister and Minister of the Economy and Employment, states, "Large companies must take their responsibilities in the transition towards a greener economy and more social justice."
The directive will affect companies with more than 1,000 employees and a turnover exceeding €450 million, encompassing activities from upstream production to downstream distribution, transport, or storage of products. Companies will have to implement a risk-based system to monitor, prevent, or remedy human rights or environmental damages identified by the directive. Dermagne emphasizes, "The Corporate Sustainability Due Diligence directive will give us the possibility to sanction those actors that violate their obligations. It is a concrete and significant step towards a better place to live for everyone."
Companies must ensure that human rights and environmental obligations are respected along their chain of activities. If violations occur, appropriate measures to prevent, mitigate, or compensate for adverse impacts must be taken. Additionally, companies will have to adopt and implement a climate transition plan aligned with the Paris agreement on climate change.
Following the Council’s approval, the legislative act will be signed by the President of the European Parliament and the President of the Council before publication in the Official Journal of the European Union. Member states will then have two years to implement the regulations and administrative procedures. The directive will be rolled out in phases, with larger companies facing shorter timelines.
This milestone follows the Commission's proposal in February 2022, with the Council adopting its general approach in December 2022 and a provisional agreement reached by Council and Parliament in December 2023. The approval of the Corporate Sustainability Due Diligence directive marks a significant stride towards corporate accountability for sustainability, reflecting the EU's commitment to a greener, fairer future.
