Search for:
ESG

European Union: Member states have reached agreement on Corporate Sustainability Due Diligence Directive

By , , and 2 Mins Read

In brief

EU member states support narrower scope

After long and tough discussions, EU ambassadors adopted a new compromise proposal on the Corporate Sustainability Due Diligence Directive (CSDDD) in Brussels on 15 March 2024. Now the measures are likely to pass into law. The next step is for the Parliament to give its approval.

Key highlights

1. Size thresholds

Based on the information available, the new agreement significantly narrows the scope, excluding almost 70 % percent of companies originally in scope of the draft CSDDD as agreed upon between the European Parliament and Council of Ministers in December 2023.

The size thresholds for companies subject to the updated CSDDD have been adjusted:

  • Number of employees: From 500 to 1000.
  • Turnover: From EUR 150 million to EUR 450 million.

2. Phased implementation

The implementation will be phased in over the coming years:

  • Companies with over 5,000 employees and a turnover exceeding 1.5 billion must comply within three years.
  • Companies exceeding 3,000 employees and a turnover above 900 million will have four years to adjust.
  • Companies with more than 1,000 employees and a turnover exceeding 450 million will be granted the longest application period of five years to comply.

3. Relationship with CSRD

The prevent action plans required by the updated CSDDD will be similar to those under the Corporate Sustainability Reporting Directive (CSRD) to avoid redundancy. Companies already complying with CSRD reporting will not need a separate climate transition plan under CSDDD.

4. Relationship with the LkSG

We will share with you a detailed analysis of the needed amendments to the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) once the EU Parliament has adopted the CSDDD.

As always, your dedicated team at Baker McKenzie remains committed to keeping you informed about legal developments that may impact your business. Should you have any questions or require further clarification on these updates, please do not hesitate to contact us.

Categories:
Author

Anahita Thoms heads Baker McKenzie's International Trade Practice in Germany and is a member of our EMEA Steering Committee for Compliance & Investigations. Anahita is Global Lead Sustainability Partner for our Industrials, Manufacturing and Transportation Industry Group. She serves as an Advisory Board Member in profit and non-profit organizations, such as Atlantik-Brücke, and is an elected National Committee Member at UNICEF Germany. She has served for three consecutive terms as the ABA Co-chair of the Export Controls and Economic Sanctions Committee and as the ABA Vice-Chair of the International Human Rights Committee. Anahita has also been an Advisory Board Member (Beirätin) of the Sustainable Finance Advisory Council of the German Government.

Anahita has won various accolades for her work, including 100 Most Influential Women in German Business (manager magazin), Top Lawyer (Wirtschaftswoche), Winner of the Strive Awards in the category Sustainability, Pioneer in the area of sustainability (Juve), International Trade Lawyer of the Year (Germany) 2020 ILO Client Choice Awards, Young Global Leader of the World Economic Forum, Capital 40 under 40, International Trade Lawyer of the Year (New York) 2016 ILO Client Choice Awards. In 2023, Handelsblatt recognized her as one of Germany’s Dealmaker and “most sought after advisors of the country” in the field of sustainability.

Author

Kimberley Fischer is a member of the International Trade Practice in Baker McKenzie's Berlin office. She joined the Firm in 2022. Kimberley studied law at the Ruprecht Karls University of Heidelberg and the Universidad de Deusto (Spain), with a focus on public international law and human rights. Prior to joining the Firm, Kimberley completed her legal traineeship at the Higher Regional Court of Frankfurt am Main, the German Federal Foreign Office in Berlin and at an international law firm in Brussels and Frankfurt am Main. She also gained significant experience in public (international) law as a research assistant at the University of Heidelberg and at a reputable law firm.

Author

Dr. Alexander Ehrle is a member of the Firm's International Trade Practice in Baker McKenzie's Berlin office. Alexander studied law at the Universities of Heidelberg, Montpellier (France), Mainz, Munich and New York (NYU) specializing in Public International and European Law. He worked as advisor and member of a delegation of a developing country at the United Nations before qualifying for the German bar. He spent his clerkship with the Higher Regional Court in Berlin, the German Ministry of Foreign Affairs in Berlin and Tokyo as well as an international law firm in Frankfurt and Milan. He wrote his doctoral dissertation on the structural changes of public international law and their conceptualization in academic discourse basing his research on the governance of areas beyond national jurisdiction. Alexander is admitted to practice in Germany and New York. 

Alexander co-chairs the Business & Human Rights Committee of the American Bar Association’s International Law Section and has been recognized as one of 40 under 40 lawyers worldwide for foreign investment control by the Global Competition Review.

Author

Caroline Walka is a member of the foreign trade practice in Baker McKenzie's Berlin office. She joined the Firm in 2024.
Caroline studied law at the Freie Universität of Berlin and the Universidad de Granada (Spain) as well as the University of Edinburgh with a focus on public international law and human rights.
Before joining Baker McKenzie as an associate, Caroline completed her legal clerkship at the Higher Regional Court of Berlin, with the Berlin Senate Administration, at the Baker McKenzie office in Berlin and an NGO in Windhoek, Namibia. She gained important experience in (international) public law during her LLM at the University of Edinburgh, where one of her focusses was business and human rights.

Related Posts

Write A Comment