Is Your Company Aware and Ready to Adhere to the European Commission’s Corporate Sustainability Due Diligence Policy?
The Corporate Sustainability Due Diligence Directive (CSDDD) was first proposed to the European Commission on February 23rd, 2022. The legislative framework, if approved, will oblige companies to follow a set of requirements demonstrating corporate and sustainable responsibility, to protect the environment and human rights. The proposal also aims to ensure climate change is not further escalated, including short, medium, and long-term damages. This includes not only the company’s own operations but its entire supply chain. On a corporate level, this proposal assumes a coherent legal framework within the EU, transparency, better risk management and adaptability, and a more equal level playing field, which is expected to increase innovation and human talent.
As such, companies will have to conduct not only personal due diligence but also due diligence on the activities of their subsidiaries and other affiliated entities with which they have direct and indirect business relationships. This is in addition to ensuring that their business strategy is in line with the Paris Agreement regulations for corporations. If adopted, companies must further set up structures through which to oversee the implementation of the due diligence process and integration of the above-mentioned strategies, in line with the anticipated proposal.
GlobalSource can support companies adhering to the new legislative framework, pending approval. With years of experience in the field, having conducted hundreds of due diligence checks on businesses and individuals alike, GlobalSource’s well-rehearsed staff and network of expert sources in key positions and agencies can support companies adapt to and navigate these potential new regulations. Moreover, GlobalSource can assist companies in understanding whether an individual and/or entity meet regulatory criteria and identify any red flags they may raise.
The EU’s Legal Affairs Committee voted in favor of the proposed law on April 25th, 2023, and a final plenary vote is scheduled for early June, according to the registered charity ShareAction’s EU, which is a signatory to the Responsible Lobbying Framework.
Since originally proposed in 2022, numerous debates and changes have taken place, ironing out the details of who this law will include, and what companies will be compelled to do. Originally left out of the equation, investors and asset managers are set to also be included in this new proposed due diligence law, recent reports covering the matter have indicated. Getting away with it still, are pension funds, alternative investment funds, credit rating agencies, and market operators, those studying the loopholes, such as ShareAction’s EU, found.
