On 24 April 2024, the Corporate Sustainability Due Diligence Directive, also known as CSDDD or CS3D, was finally passed by the European Parliament, following a somewhat tumultuous 4-year legislative process.
The CSDDD establishes far-reaching mandatory human rights and environmental obligations on both European Union and non-EU companies meeting certain turnover thresholds and it comes into effect in 2027.
Following the news, large organisations have already begun preparing for CSDDD compliance.
Which businesses are in scope?
- EU companies with more than 1,000 employees and a net global turnover of more than EUR 450 million; and
- non-EU companies generating a net turnover of more than EUR 450 million within the EU.
What are the key implications?
In-scope companies will be required to do the following under CSDDD:
- identify and assess any adverse impact that business activities may have on both human rights and the environment
- prevent, mitigate and minimise or end such adverse impacts; and
- create and implement a transition plan for climate change mitigation which ensures the company’s business model and strategy is fully aligned with limiting global warming to 1.5 °C , as set out in the Paris Agreement.
Aside from the above being ethically sound and good business practice, any business found in breach of the legislation will be facing severe financial penalties of up to 5% of net turnover.
Many businesses were already prepared for the outcome of the CS3D and have begun putting in place new measures to ensure they are fully compliant by 2027.
One of the first steps in the process is appointing a Head of Human Rights to take full ownership of this area. With human rights an ongoing endeavour, more and more businesses are opting for a full time employee, rather than a fixed term contract or outsourcing the work.
We have witnessed a steady increase in demand for human rights specialists and with this being a relatively nascent area, we know that this demand will soon outstrip supply.
If you would like to discuss the human rights recruitment market, please get in touch with Adam Bond for an informal chat.