On 15 March 2024, the European Union Council voted to adopt the Corporate Sustainability Due Diligence Directive (CS3D). Under this directive, large companies domiciled in the EU and foreign companies generating significant revenues in the EU will be obliged to comply with the new sustainability due diligence obligations.
S3D requires companies to carry out risk-based due diligence, in particular, to:
- integrate due diligence into their policies and risk management systems;
- identify, assess and (where necessary) prioritise potential and actual adverse impacts;
- prevent and mitigate potential adverse impacts;
- bring actual adverse impacts to an end, or minimise their extent;
- remediate actual adverse impacts;
- carry out meaningful engagement with stakeholders;
- establish and maintain a notification mechanism and complaints procedure;
- monitor the effectiveness of due diligence policy and measures; and
- communicate publicly on due diligence.
Through CS3D, companies will be liable for damages and can be fined for non-compliance. CS3D applies to EU and non-EU companies and parent companies with turnover of more than 450 million euro. It requires firms to create transition plan that complies with Paris Agreement.
Further:
Andriyani + Hidayat | Counsellors at Law 