CS3D Voting (EU Parliament Due Diligence Rules)

The EU is stepping up the Single Market due diligence requirements.

On April 18th, members of the European Parliament reached an agreement on the Corporate Sustainability Due Diligence Directive (CSDDD).

This directive is a building block of the European Green Deal (together with CSRD, SFDR, and Taxonomy) and aims at holding large companies accountable for human rights abuses and environmental violations in their value chain.

Here are a few takeaways from the negotiations:

• The CSDDD targets EU companies with more than 250 employees and a turnover >40 M€ as well as non-EU companies with >40 M€ revenues in the EU. This includes asset managers and institutional investors.
• The directive focuses on upstream supply chain and excludes the downstream use of products or services from due diligence requirements.
• The biggest companies (>150 M€ in turnover) will have to comply with the directive 3 years after it enters into force, while the others can take up to 5 years.
• In order to ensure a level playing field for EU members states, the directive prevents national authorities from introducing more stringent due diligence requirements.

Parliament should vote on May 31st or June 1st, then enter into final negotiations with member states' governments in the EU Council.

A major point to address during these negotiations will be to decide whether the inclusion of financial institutions will be left up to member states to decide, as agreed in their common position lastDecember.