The future CSDDD will require companies to integrate a “duty of vigilance” into their risk management policies and systems, and to provide a description of their approaches, operations, and code of conduct. Companies will also be required to adopt a plan to ensure that their business model is consistent with efforts to limit global warming to 1.5°C, as set out in the Paris Agreement.
The CSDDD proposal is more restrictive than the French duty of vigilance:
- Its scope is broader. Whereas French law applies only to companies with over 5,000 employees, the CSDDD will apply to:
- EU companies and parent companies with over 500 employees and worldwide sales of more than 150 million euros.
- Companies with more than 250 employees and sales of more than 40 million euros, if at least 20 million euros are generated in one of the following sectors: manufacturing and wholesaling of textiles, clothing and footwear, agriculture (including forestry and fishing), manufacturing of foodstuffs and trading of agricultural raw materials, extraction and wholesaling of mineral resources or manufacturing of related products, and construction.
- Non-European companies with net sales of 300 million euros in the EU.
These companies will have to identify, assess, prevent, mitigate, terminate, and remedy the negative impact of their activities on people and the planet. They will have to engage meaningfully with those affected by their actions, introduce a complaints mechanism, communicate on their duty of vigilance policies, and regularly monitor their effectiveness.
- A supervisory body will be designated. While French law didn’t create one, the CSDDD states that each EU country shall designate a supervisory authority responsible for checking that companies comply with their obligations.
- Fines may be imposed. The supervisory authority will be able to launch inspections and investigations, and impose sanctions on non-compliant companies, including public denunciation and fines of up to 5% of their worldwide net sales. There are no fines imposed under French law .
The financial sector is temporarily excluded from the scope of the CSDDD proposal. However, it will include a review clause for the possible inclusion of this sector in the future.
Our lawyers can help you with:
- Raising awareness and preparing teams, Executive committees and boards of directors for future obligations arising from the CSDDD.
- Providing counsel and assistance in the event of litigation based on the duty of vigilance.
- Drawing up vigilance plans and environmental, social and governance (ESG) policies.
- Auditing, evaluating, benchmarking, and verifying the compliance of ‘ ESG policies. Identifying, cartographying, and managing environmental, social and governance risks.
- Dialoguing with shareholders and stakeholders on ESG policies and sustainability issues.
- Preparing sustainability reports for certification.
Our lawyers’ expertise covers a wide range of CSR matters, such as energy, environmental, corporate governance, social and societal issues, as well as sustainability reporting to comply with the CSRD, green and sustainable finance, and assistance with litigation, disputes and reputational risks arising from ESG commitments.
