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Corporate Sustainability Due Diligence Directive (CS3D) Changes the Legal Landscape for Large Companies and Their Chains of Activities

Helsinki Law Review 1/2024 s. 8–23
4.11.2024
Asiantuntija-artikkeli

The article discusses the Corporate Sustainability Due Diligence Directive (the ‘CS3D’), which was adopted by the European Parliament on 24 April 2024. It is the first Europe-wide piece of legislation to impose binding human rights and environmental obligations on companies. The truly new element in the Directive is the obligation for the companies in scope to adopt and put into effect a transition plan for climate change mitigation which aims to ensure compatibility of the business model and of the strategy of the company with the transition to a sustainable economy and with the limiting of global warming to 1,5 °C in line with the Paris Agreement.

The Directive must be incorporated in national legislation by all Member States by 26 July 2026, and the new rules will become applicable to companies in phases, starting with the largest companies on 26 July 2027 and then gradually based on certain thresholds. Although the Directive will directly apply only to the largest companies that have more than 1,000 employees and a net worldwide turnover of more than EUR 450 million, the directive indirectly impacts on a substantial number of enterprises, including SMEs, in their chains of activities.

This article will consider the two main obligations introduced by the Directive, namely due diligence (chapter 2) and the climate change transition plan (chapter 3). In the final part of this article (chapter 4), some considerations regarding national legislation will be discussed.

(Edilex editorial team)

Asiasanat
• Due diligence - Euroopan unioni - Ihmisoikeudet - Kansainvälinen yritystoiminta - Kestävä kehitys - Ympäristönsuojelu