Yesterday, I wrote about the EU Parliament and Council’s new political deal on the Omnibus simplification package. That blog focused on how the deal affects the Corporate Sustainability Reporting Directive (CSRD). However, another major piece of EU sustainability legislation is also impacted. The Corporate Sustainability Due Diligence Directive (CSDDD) faces a number of amendments under the deal. A memo from Linklaters summarizes the high-level changes:
- “EU companies would fall within scope if they have more than 5,000
employees and an annual net turnover of more than EUR 1.5 billion. - Non‑EU companies would fall within scope if they have a net turnover in the
EU of more than EUR 1.5 billion. - The requirement in the CSDDD to produce a climate transition plan has been
removed entirely. However, the requirement under the CSRD to disclose a transition plan, if the company has one, remains. - In relation to Article 8 of the CSDDD on supply chain due diligence, Mr
Warborn said during the press conference that the agreement is a compromise between the two different positions the co‑legislators had at the start of the trilogues. The final agreement provides that companies can focus on the areas of their chains of activities where actual and potential adverse impacts are most likely to occur. Where a company has identified adverse impacts that are equally likely or equally severe in several areas, it is given the ability to prioritise assessing adverse impacts that involve direct business partners. Companies are expected to base their efforts on reasonably available information and should refrain from requiring unnecessary information from companies that are not within the scope of the CSDDD. - Provisions in the current CSDDD on harmonised (EU-wide) civil liability are
removed. The civil liability would be defined by the national law of each
Member State. Fines cannot exceed 3 per cent of net worldwide turnover. - The deadline for transposition of the CSDDD has been postponed by one year
to 26 July 2028, with companies required to comply with the new measures
by July 2029. - The provisional agreement introduces a review clause concerning a possible
extension of the scope for both the CSRD and the CSDDD.”
Like the CSRD, the non-EU “extraterritorial” requirements remain intact. However, the scope of companies subject to these provisions is significantly narrowed. Overall, it appears that the CSDDD faced heavier cuts than the CSRD. This is in line with what we’ve been expecting since the announcement of the Omnibus reforms. As the political deal moves forward, we’ll see if any of these amendments evolve.
Our members can learn more about CSDDD here.
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