The European Union recognizes the urgent need to act on human rights violations in other parts of the world as a result of European consumption. The current legal framework is considered ineffective in terms of making companies responsible for their negative impact on labor rights and respect for the environment. In addition, the European Union’s emission reduction targets, require a thorough analysis of value chains.

The answer to these problems is the Corporate Sustainability Due Diligence Directive (CSDDD), which addresses corporate sustainability due diligence and fills in the gaps in previously adopted legislation (EU Taxonomy, CSRD).

What does the directive cover?

The goals set by the directive are to contribute to the improvement of corporate governance practices, to increase responsibility for the adverse effects of business activities, and to improve access to legal protection for those affected by negative corporate actions.

The directive requires companies to conduct human rights and environmental due diligence by:

  • incorporating due diligence into company policies,
  • identifying and preventing adverse impacts on human rights and the environment in their operations,
  • monitoring the effectiveness of company’s policies,
  • providing information on due diligence to the public.

The directive also sets out sanctions for violations of the above obligations, such as financial penalties.

Due diligence – what does it actually mean?

Due diligence is defined by the Organisation for Economic Co-operation and Development (OECD) as: „the process that companies should follow to identify, prevent, mitigate and take responsibility for removing actual and potential negative impacts associated with their operations, supply chains and other business relationships.”

This means, therefore, that companies should thoroughly examine and review their value chain in order to eliminate human rights violations and respect the environment.

Who is required to comply with the CSDD?

  • Companies that are required to report on non-financial information,
  • Companies with more than 250 employees that have net revenues of €40 million and 50% of those revenues come from the sector specified in the directive.

This directive also applies to companies established and operating outside the European Union if they have reported net sales revenues of more than 150 million euros in the Union.

Work on the directive is still in progress. EU member countries will have 2 years from the directive’s entry into force to transpose it into national law. It is estimated that the directive will include requirements for about 9,400 companies in the EU and 2,600 outside the EU.

What can Go4Energy do for you?

We offer advice to our clients on the CSDD and CSRD:

  • consulting on EU climate change regulations,
  • creation of non-financial reports for buildings and organizations,

We also support the implementation of ESG and sustainability activities:

  • building and organization carbon footprint calculations,
  • analysis of compliance with the EU Taxonomy for new buildings,
  • analysis of compliance with the EU Taxonomy for building renovations,
  • conducting an analysis of the impact of BREEAM, LEED and WELL certification on the Taxonomy,
  • decarbonization strategies,
  • climate neutrality strategies,
  • developing a sustainability strategy adapted to a specific client,
  • identification and verification of compliance with the EU Taxonomy to confirm the sustainability of the investment in accordance with EU requirements for both existing and new buildings.

If you need support in the due diligence or non-financial reporting process, we invite you to contact us. Our experts will provide your organization with expert advice and support at every stage of the proces.

Author: Emilia Rogowska