EU Parliament Approves Landmark CSDDD Law for Sustainable Business
The European Parliament has approved the Corporate Sustainability Due Diligence Directive (CSDDD), a significant step towards ensuring businesses respect human rights and the environment. The law, approved on Wednesday, holds companies accountable for their impact on human rights and the environment throughout their supply chains.
The CSDDD requires companies and their suppliers to prevent, end, or mitigate adverse impacts on human rights and the environment. Companies will be liable for damages caused by breaching their due diligence obligations and must fully compensate victims. The implementation timeline varies; larger companies must comply by 2027, while smaller ones have an additional one to two years.
EU member countries have two years to create national laws reflecting the new directive. They are responsible for investigating and penalizing non-compliant companies, with fines of at least 5% of annual worldwide revenue. Companies must also adopt a transition plan to align their business model with the Paris Agreement's 1.5°C limit. However, the directive covers only a minority of EU companies, leaving many intermediary and smaller operators unaccountable.
The CSDDD applies to EU companies and parent companies with over 1,000 employees and 450 million euros in annual revenue, and non-EU companies with the same amount of EU revenue. This new directive aims to promote sustainable and responsible business practices, with companies now expected to play a more active role in protecting human rights and the environment.
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