The directive will apply directly to companies and capital groups with more than 1,000 employees and more than €450 million in revenue. The CSDDD introduces far-reaching equality between companies registered in EU member states and those outside the EU but doing business within it. The directive provides for transition periods, i.e., in the first two years (2027, 2028), its provisions will apply to larger companies, and only from mid-2029 to all companies meeting the above criteria. However, it is worth remembering that the CSDDD concerns due diligence in value chains. It will therefore often be the case that the provisions do not yet apply directly to our company, but our larger business partner will already expect compliance with them in 2027 or 2028.
During negotiations, Member States insisted on the inclusion of the concept of value chain, which replaced the widely known and used term value chain. It replaced it – but only in the CSDDD. Nowhere else, whether in the CSRD or in the Taxonomy (Minimum Guarantees), has anything changed. The facilitation that Member States allegedly fought for on behalf of companies is therefore not only illusory, but has actually become an obstacle. Now, for the purposes of most legal regulations and business partner requirements, we will continue to conduct due diligence processes across our entire value chain, and for the purposes of compliance with the CSDDD, we will additionally have to use business chain.
Implementing and applying due diligence processes is a difficult task, but this directive provides for a number of support measures from the European Union. First of all, the European Commission will issue a series of guidance documents on, among other things, risk assessment, the application of best practices for individual stages of due diligence processes, and the creation of transition plans. In addition, the Commission will present voluntary model contractual clauses. I expect that, over time, all economic operators will use them, which will be a huge help to companies that are currently struggling to persuade their business partners to enter into various clauses resulting from documents such as codes of conduct for suppliers. The main problem with all these guidelines is the deadline for their publication – the Commission has until 2027 to develop them.
The three issues described above caught my attention in particular when reading the final text of the directive. The CSDDD will actually affect almost all companies (some directly, others indirectly), the provisions will be applied in practice to the entire value chain, and the European Commission is preparing a number of support mechanisms to facilitate the application of the directive. There is still some time before it comes into force, but it is worth familiarizing yourself with its requirements now ?
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