Why is it in the news?
- European Parliament approved the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D).
About CS3D
| Aspect | Description |
| Aim | – Foster sustainable and responsible corporate behaviour.
– Anchor human rights and environmental considerations in companies’ operations and corporate governance. |
| Key Features | – Due Diligence Requirement: Companies must account for their actual and potential adverse impacts, such as pollution and child labour.
– Transition Plan: Companies must adopt a plan to align their business model with the Paris Agreement’s global warming limit of 1.5°C. |
| Coverage | – EU Companies: Includes companies and parent companies with over 1000 employees and a worldwide turnover higher than €450 million.
– Non-EU Companies: Also covers non-EU companies, parent companies, and companies with franchising or licensing agreements in the EU, meeting the same turnover thresholds in the EU. |
| Penalties for Violations | – “Naming and Shaming”: Companies found violating the directive may face public disclosure of their actions.
– Fines: Fines can be as high as 5% of the company’s net worldwide turnover. |
| Concerns Related to CS3D | – Challenges for Developing and Underdeveloped Countries: Compliance with the regulation may require more resources, posing difficulties for companies from developing and underdeveloped countries. |
