CS3D hails a new era in corporate governance – it’s time to prepare

CS3D hails a new era in corporate governance – it’s time to prepare

January 2024 marked a major change in Germany’s mandatory human rights due diligence legislation. Any business with over 1,000 employees is now required to fulfil a number of obligations around human rights reporting and supply chain transparency, or risk a harsh financial penalty.

However, this is only the tip of the iceberg. Germany may be leading the way, but other countries are not far behind.  Soon, there are stringent requirements which will fall to business across Europe and beyond, most notably when the EU’s Corporate Social Due Diligence comes into force.

While the introduction of this law may be two years away, now is the time to prepare: leaving it too late to act could have far-reaching consequences.


What is the Corporate Social Due Diligence Directive?

The Corporate Social Due Diligence Directive – commonly abbreviated as CS3D - is new legislation around human rights reporting which is currently making its way through European parliament. Once implemented, in early 2026, large organisations will be obligated to carry out due diligence on both their own activities as well as that of their suppliers, across the entire value chain.

In addition, companies will need to define, identify and then prevent or mitigate any actual or potential adverse impacts their activities may have on human rights and the environment.  While the mandatory due diligence rules exclusively target large businesses with headquarters or operations within the EU, the impact will be far-reaching, involving suppliers, distributors, and business customers across the world.

It's fair to say we are on the brink of a new era in corporate governance, where supply chain transparency and compliance with new social regulations will become part of everyday life – particularly for the teams working in compliance, ESG and sustainability.


Key Considerations for Supply Chain Transparency and Compliance with CS3D

Companies will need to consider the following steps to ensure full compliance:

  • Appoint a Human Rights Officer
  • Embed due diligence in company policy
  • Identify current and potential adverse effects
  • Implement initiatives to prevent further environmental and social impact
  • End any contracts or agreements which may lead to adverse impacts
  • Ensure a robust system is in place for complaints relating to potential human rights violations
  • Monitor the impact of initiatives
  • Implement a communications plan: it is a requirement under CS3D that companies publish an annual report on human rights, adverse impacts and preventative or corrective measures taken


How to find a Human Rights Officer

The post of Human Rights Officer – or Head of Human Rights – will soon become mandatory in large organisations. However, this is a branch of corporate governance which is still in its nascence.  Human Rights specialists typically make the transition from either compliance, legal, ESG or sustainability and our Guide to Human Rights Due Diligence and Recruitment contains some unique data on this subject, along with a deeper analysis of how those backgrounds can bring transferable skills.

We expect to see a sharp increase in demand for human rights specialists this year, as more companies prepare for CS3D.


How we can help

Leonid is one of the first recruitment firms in the world to specialise in the human rights niche and our passionate team have invested a great deal of time in getting to know the candidate market.

If you would like to have an informal chat about the human rights recruitment market, please get in touch with Adam Bond today!