THE EU CSDDD ADOPTED ON 24 MAY 2024 WILL ONLY APPLY TO THE LARGEST COMPANIES OPERATING IN THE SINGLE MARKET.


Initially it was left to businesses to voluntarily put these 2011 Principles into practice and demonstrate their ‘responsibility to respect human rights’. But in the last decade [see Figure 2], a number of countries including France, Germany, Switzerland, Netherlands, and Norway have – in different ways - introduced legal requirements requiring companies to do human rights due diligence. The 2024 EU CSDDD aims to harmonise this approach across the single market, and make it compatible with reporting requirements under the 2022 EU Corporate Sustainability Reporting Directive (CSRD).


The EU CSDDD adopted on 24 May 2024 will only apply to the largest companies operating in the single market, starting in 2027 with the largest companies with more than 5,000 employees with a global turnover of more than €1.5 billion. The scope will gradually expand by 2029 to cover companies with more than 1,000 employees with a global turnover of more than €450million. SOMO, a Dutch NGO, estimates that 5,400 European companies will be in scope. The CSDDD will need to be transposed at national level within two years. For non-European companies, the scope will be based on turnover generated in the European market. The European Commission will publish list of in-scope companies. The Directive will be transposed into national law and will be overseen by national enforcement bodies. The European Commission will issue guidance to try to ensure that this is done consistently by each country.


Figure 2: Development of sustainability and transparency laws in the last decade


Source: IHRB 13 | ADMISI - The Ghost In The Machine | Q2 Edition 2024


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