CSDDD 2024 KYC


The CSDDD will need to be transposed at national level within two years.


The 2024 EU CSDDD aims to harmonise this approach across the single market.


If companies have compliance and KYC systems in place, this is a good start, but these may not reveal much about the human rights risks associated with a product.


GET READY FOR NEW HUMAN RIGHTS LEGISLATION


Hot on the heels of the EU Deforestation Regulation (EUDR), EU ESG legislation with an emphasis on the ‘S’ will also have an impact on commodity trading.


Before the last European Parliament broke up, they adopted two important pieces of legislation relating to human rights which will have an impact on those involved in commodities, although it is too early to say whether it will be as significant as the EU Deforestation Regulation.


The two laws are the Corporate Sustainability Due Diligence Directive (CSDDD) and the Forced Labour Regulation (FLR). They have a shared aim: to reduce the negative human rights impacts associated with producing, processing, and transporting products, including commodities. The FLR is focussed on the rights of workers in the supply chain to decent working conditions. The CSDDD – sometimes known as the CS-Triple-D) covers all human rights. This includes workers, including their safety (right to life). But it could also include, for example, local communities whose land was taken for a mine or a plantation (right to livelihood), or who are affected by pollution from it (the right to health).


Figure 1


These two laws are further steps in a trend towards turning the 2011 United Nations Guiding Principles (UNGPs) on Business and Human Rights into hard, enforceable, law. The UNGPs were designed to have three pillars, the Protect-Respect- Remedy framework [see Figure 1]. This means:


1. governments have a duty to protect human rights, mainly through laws, and their enforcement;


2. businesses have a responsibility to respect human rights, through effective human rights due diligence;


3. rightsholders must have access to remedy through judicial or non-judicial means when their human rights are negatively impacted. This might mean remedy from the company, such as taking steps to end the problem, providing compensation, or apologising, or it might involve a court judgment.


Source: SHIFT project https://shiftproject.org/resources/ungps101/


12 | ADMISI - The Ghost In The Machine | Q2 Edition 2024


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