EU Corporate Sustainability Due Diligence Directive enters into force; member states have 2 years to transpose into national law
The Corporate Sustainability Due Diligence Directive (CSDDD) was published in the EU's Official Journal on 5 July 2024 and entered into force on 25 July 2024. Member states now have to transpose it into national legislation until 26 July 2026. On 24 May 2024, EU member states had formally confirmed the CSDDD in Council – the absolute final sign-off of this landmark law, after a 4-year legislative process at EU level with many twists and turns, and almost a decade of advocacy. Civil society organisations have welcomed the final directive as a gamechanger despite loopholes, calling on EU capitals to go further than what is in the EU text in their national transpositions. We are keeping track of NGO and others' reactions and analysis in the timeline below. Our own initial reaction is here.
Background: In the early morning of 14 December 2023, negotiators from the European Parliament, Council and Commission had reached a final political deal on the EU Corporate Sustainability Due Diligence Directive (CSDDD). A joint press conference took place the same day.
Civil society welcomed the Trilogue agreement but criticised loopholes and missed opportunities, such as the exclusion of financial activities from due diligence.
Following the political agreement from December 2023, final technical details were worked out, paving the way for EU Parliament and Council to formally adopt the directive (4 column document here). However, despite ongoing broad business support for the directive, an effective and at the same time practicable risk-based approach, and comprehensive protections for SMEs, German junior coalition partner FDP - in a last-minute move that received much international and national criticism - announced it was rejecting the compromise. They were blocking German support for the CSDDD in Council.
#Breaking EU Member States formally adopted the Corporate Sustainability Due Diligence Directive #CSDDD this morning – the final sign-off of this landmark corporate accountability law - after almost a decade of advocacy. Member states have 2 years to transpose into national laws pic.twitter.com/czrsMj8QFf
— Business & Human Rights (@BHRRC) May 24, 2024
In a meeting on 28 February, member states failed to endorse the CSDDD, with Italy's and France's (after a last-minute attack) position uncertain as well. Over 130 organisations, including the Resource Centre, called on the Belgian EU Presidency and member states to return to negotiations and secure a majority for the text agreed during the Trilogue. A recording of a press conference held the same day by EU Parliament Rapporteur Lara Wolters is available here.
On 15 March 2024, member state ambassadors in COREPER endorsed the Belgian Presidency’s political deal on the CSDDD, despite Germany's abstention. Compared to the deal reached in December 2023, the new agreement included some painful concessions, particularly on the number of companies it will cover. NGOs welcomed the Council's endorsement as a landmark decision, but criticised the last-minute changes to the deal.
100+ businesses & networks reaffirm support for CSDDD
Overview: Business support incl. from DE, IT & Nordics
Resource Centre Commentary
"How Change Can End Corporate Abuse"
Before it was put to a final, formal vote by EU ministers, the new compromise text had been confirmed in the EU Parliament's Legal Affairs (JURI) Committee on 19 March, the final parliamentary plenary vote on 24 April (consolidated text in all EU languages from Parliament website here), and a COREPER meeting on 15 May.
The last-minute setback in early 2024 was despite overwhelming support. Numerous academics and large and small companies and their networks called on the German Government and Chancellor Scholz to secure a majority for the EU Trilogue compromise. There were similar calls on EU Governments by businesses from other regions, as well as over 300 B&HR professionals and the United Nations.
For background leading up to the political agreement of 14 December 2023, please refer to this story – following Justice Commissioner Reynders' initial announcement in 2020 and the Parliament's own-initiative report in 2021, the EU Commission had presented a proposal for an EU mandatory due diligence law in February 2022. Trilogue negotiations began in summer 2023, after the Council had adopted its position in December 2022 and the Parliament in June 2023.
Further materials and information, including on business support for the CSDDD, are available in the timeline below, on our Mandatory Due Diligence Portal, and in our blog series Towards Mandatory Human Rights Due Diligence.