In late April, the European Parliament voted to adopt the Corporate Sustainability Due Diligence Directive, which will apply to EU companies and to non-EU companies with activities in the EU that meet specified thresholds. A discussed in this new Cooley Alert, EU Adopts Mandatory Rules on Corporate Sustainability Due Diligence That Will Apply to Many US Companies, from Cooley’s International ESG and Sustainability Advisory team, the CSDDD could turn out to be a “heavy lift” for many in-scope companies: the new law will mandate, for the first time, comprehensive “human rights and environmental due diligence obligations, with significant financial penalties and civil liability for companies that do not fully comply,” as well as new requirements for companies “to adopt and put into effect a climate transition plan” and “to report on their due diligence processes.” As the Alert observes, these requirements “reframe existing international soft laws”—UN Guiding Principles and OECD guidelines—as “mandatory obligations.”
For example, with regard to mandatory human rights and environmental due diligence, under the CSDDD, the Alert explains, companies “will be required to identify and, where necessary, prioritize, prevent, mitigate, bring to an end, minimize and remediate potential and actual adverse human rights and environmental impacts whilst engaging in stakeholder consultation throughout.” The Alert goes on to describe what that mandatory due diligence requirement will mean in practice—just what will companies have to do to comply? Be sure to check out the Alert!
