Today, 1st June, the European Parliament, in the Plenary Session in Strasbourg will vote on the Draft European Parliament Legislative Resolution on a Corporate Sustainability Due Diligence Directive (CS3D).

While MEPs from other committees appointed for opinion had the chance to table amendments to the presented text, the main body of the vote - the JURI report voted at the end of April, introduced some key elements to keep into high consideration.

Indeed, according to the legislative resolution:

• All companies should be required to conduct due diligence along their value chain, both upstream and downstream, and to consider the negative impacts on human rights and the environment, including climate and corruption.

• Enlarged scope of application to interest every company in the EU and outside with more than 250 employees.

• Companies should work in close collaboration with trade union and NGOs in identifying, preventing, prioritising and remedying these risks.

• Companies must remedy any damage in full dialogue with the affected persons, including compensation or rehabilitation. This is a fundamental part which was completely missing from the Commission proposal.

• Companies are liable for failure to due diligence, which means that they have caused or contributed to damage that they could have prevented.

• Strong sanctions up to 5% of annual turnover when companies do not properly carry out due diligence processes. Consequence to a breach to the law can include fines or the withdrawal of a product from the market until a company intervenes.

• Companies must introduce ambitious climate plans, in line with the Paris Climate Agreement, including Scope 1, 2 and 3 emissions.

• Companies’ administrators must also take responsibility for the supervision of due diligence and bonuses should be linked to their efforts. Directors are legally responsible for overseeing due diligence.

These rules should apply:

• 3 years from the entry into force of this Directive for

  • companies with more than 1000 employees on average and had a net worldwide turnover of more than EUR 150 million in the last financial year.

• 4 years from the entry into force of this Directive for:

  • Companies with more than 500 employees on average and had a net worldwide turnover of more than EUR 150 million in the last financial year.

  • Companies with more than 250 employees on average and had a net worldwide turnover of more than EUR 40 million.

  • Companies which generated a net turnover of more than EUR 40 million in the Union and EUR 150 million worldwide in the financial year preceding the last financial year.

Next Steps

According to the results of the plenary vote, discussions will continue with the coming into the picture of the Council, which will express its position on the voted text, and happen mostly during the second half of 2023, under Presidency of Spain.

How CSR Europe can help you

• CSR Europe’s EU Update Webinar on the EU Agenda for Sustainable Supply Chains, taking place on June 6th from 11:00 to 12:30 (CET) will provide participants with hot insights into the European Parliament’s vote on the Corporate Sustainability Due Diligence Directive, as well as into the other key legislative text that build the EU Agenda for Sustainable Supply Chains. The webinar will explore what the best way forward for companies is, with a wide set of speakers from business, governments, and civil society.

To know more, get in touch with Giorgia Miccoli, Senior Specialist, EU Affairs (gm@csreurope.org)

• To help companies getting ready to comply with the CS3D, CSR Europe has developed the EU Alignment Service. This service aims to fill existing gaps in companies’ current strategies and anticipate the adaptation process, vis-á-vis the requirements of the different pieces of legislation that are currently under discussion, including the CS3D.

To know more, get in touch with Lorena Sorrentino, Manager, Markets Manager (ls@csreurope.org)

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