due diligence

In the early hours of December 14, 2023, the Council of the EU (“Council”) and the European Parliament (“Parliament”) reached a provisional political agreement on the Corporate Sustainability Due Diligence Directive (“CSDDD”). Described as a “historic breakthrough” by Lara Wolters, who has led this file for the Parliament, the CSDDD will require many companies in the EU and beyond to conduct environmental and human rights due diligence on their global operations and value chain, and oblige them to adopt a transition plan for climate change mitigation.

Given the CSDDD’s relevance for companies’ ongoing compliance planning on environmental and human rights matters, this blog aims to advise clients on the basic elements of the CSDDD agreement based on press releases from the CouncilParliament, and the European Commission (“Commission”), even if much uncertainty remains. Although a political agreement has been reached, the text of the agreement is not publicly available and a number of details of the legal text will need to be finalized in follow-up technical meetings. Covington will publish a more detailed alert on “how to prepare” for the CSDDD once the full text is available (likely in early 2024).

In Short

After intense negotiations since the Commission published its proposal in February 2022, the Directive is set to lay down significant due diligence obligations for large companies regarding actual and potential adverse impacts on human rights and the environment, with respect to their own operations, those of their subsidiaries, and those carried out by their business partners.Continue Reading Provisional Agreement on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD): Key Elements of the Deal