Supply chain compliance
After lengthy negotiations, the European Council and the European Parliament reached a provisional agreement on the content of the Corporate Sustainability Due Diligence Directive (CSDDD) on December 14, 2023. The transposition into national law will have to be accompanied by amendments to the existing Supply Chain Due Diligence Act, as some of the previously known contents of the directive are stricter than the existing purely national law. The most important key points of the directive can be seen in the press release and the press conference:
Scope of application
Following implementation by national legislators, the directive will apply to larger companies with more than 500 employees and a worldwide net turnover of EUR 150 million. In addition, it will apply to companies with more than 250 employees and a turnover of more than EUR 40 million if at least EUR 20 million is generated in certain sectors (e.g. agriculture, construction). There will also be special regulations for non-EU companies with a turnover of EUR 300 million or more in the EU.
Climate and environmental protection
Obligated companies must develop and implement a plan on how they can contribute to achieving the specified climate protection target of 1.5° within their business model and corporate strategy. The due diligence obligations also address environmental concerns such as protection against water or air pollution or excessive water consumption.
Value chain
The due diligence obligations will not only affect the upstream of the company's own business area, but also activities downstream of production, such as storage, distribution and disposal.
Liability
The CSDDD provides for civil liability of the obligated companies for damage caused intentionally or negligently by breaches of due diligence. Affected parties can assert claims against companies within 5 years.
Sanctions
The competent national supervisory authorities can initiate investigations and, among other things, impose fines of up to five percent of global net turnover and publish violations (naming and shaming).
Outlook
The CSDDD will enter into force on the twentieth day following its publication in the Official Journal of the EU. The member states will then have two years to transpose the provisions of the directive into national law. It is to be expected that the German legislator will or must amend the LkSG in several places. We will of course keep you up to date on the changes.
Status: 22.12.2023