After a grueling and dramatic lawmaking process, the Corporate Sustainability Due Diligence Directive (CS3D) has been officially been approved by the European Council, marking its long-awaited official passage into law. A press release from the Council describes the law stating:
“The directive will affect companies of more than 1000 employees with a turnover of more than €450 million, and their activities ranging from the upstream production of goods or the provision of services, to the downstream distribution, transport, or storage of products. Companies affected by the legislation adopted today will have to take and implement a risk-based system to monitor, prevent or remedy human rights or environmental damages identified by the directive.
The directive requires companies to ensure that human rights and environmental obligations are respected along their chain of activities. If a violation of these obligations is identified, companies will have to take the appropriate measures to prevent, mitigate, bring to an end or minimise the adverse impacts arising for their own operations, those of their subsidiaries and those of their business partners in their chain of activities. Companies can be held liable for the damage caused and will have to provide full compensation..”
The version of the CS3D approved by the Council is no different from the latest version approved by Parliament, but differs substantially from the CS3D’s original form. While watered down from its original vision, this version of the CS3D is still expected to be a heavy lift for in-scope companies. Member states will have until June 2026 to transpose the CS3D into national law and the first group of companies required to comply will have to do so in 2027. More details will be available once the CS3D is published in the Official Journal of the EU.
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