A proposal for a Directive on Corporate Sustainability Due Diligence (CSDD) was published by the European Commission on 23rd February 2022 and addresses corporate behaviour and due diligence processes for the companies within its scope. The proposal focuses on establishing a system within company law and corporate governance to address adverse human rights and environmental impacts arising from companies' own operations, their subsidiaries' operations and their value chains.
The proposal relates to large companies, both EU and non-EU. SMEs are not directly within scope but may be indirectly impacted under the proposal – for example, if they are part of a large company’s supply chain. The proposal will apply to companies across all sectors of the economy, including regulated financial undertakings in the financial sector.
Ireland is supportive of the objective of the proposed Directive which is intended to promote responsible business conduct by companies. The proposal has the potential to be far reaching and it is vital that the text of proposal strikes the right balance by providing effective protections for stakeholders whilst ensuring that the measures to be implemented by companies are clear, proportionate, and enforceable.
Discussions have been ongoing since March of this year and good progress has been made. However, there are a number of issues yet to be resolved including in relation to definitions and scope. Discussions are ongoing on these matters.
