Due diligence: businesses to be prepared

The Corporate Sustainable Due Diligence Directive is to ensure that businesses take responsibility for the negative impacts of their activities. This directive establishes a uniform EU-wide standard compelling both EU and non-EU companies to establish due diligence strategies regarding human rights and environmental issues. It requires companies to identify and address adverse impacts on human rights and the environment within their operations, subsidiaries, and supply chains.

ESC is following closely the developments of this legislation as we would like to prepare ESC members, shippers, for the costs of complying wish this directive. 16 January, 2024, ESC attended a webinar on CSDDD organised by IntegrityNext consultancy. The speakers – Greta Koch, Policy Advisor of MEP Axel VOSS and Technical Negotiator of the CSDDD and Hortense Grouvel, Environmental, Social and Governance (ESG) expert – provided an overview of the Directive and updated the participants about the latest developments in the trilogue negotiations legislative process. 

It is important to underline that this directive will apply to both EU and non-EU companies. It will cover their actions not just in Europe but also wherever they operate and source globally.

For shippers, it is necessary to consider the costs of establishing and operating due diligence procedures. In addition, there will be transition costs, including the expenditure and investments to change a company’s own operations and value chains to comply with the due diligence obligation.

Timeline:

  • February 2022: The European Commission introduced a legislative proposal.
  • December 2023: A provisional agreement was reached between the Council of the European Union and the European Parliament.
  • June 2024: The final text is anticipated to be adopted and published. Following its publication, EU member states will have a two-year window to translate the directive into national law.
  • By 2027: It is expected that companies will have completed the necessary transition to comply with the legislation.