Corporate Sustainability Due Diligence Directive (CSDDD)

by Michelle Armstrong, TYS Global VP of Value Solutions Consultant

Corporate Sustainability Due Diligence Directive (CSDDD) requires a comprehensive approach from businesses. The CSDDD aims to ensure that companies operating in the EU market address and mitigate adverse impacts on human rights and the environment within their operations and supply chains. Here’s a guide on what your business needs to do: 

Understand the Directive and Its Scope

• Determine Applicability: The CSDDD applies to large companies operating in the EU market. This includes EU companies with significant turnover and a certain number of employees, as well as non-EU companies with substantial business in the EU. 
• Scope of Operations: Understand that the directive covers your operations, your subsidiaries, and your supply chain, including indirect business relationships.

Conduct Thorough Due Diligence

• Risk Assessment: Carry out a thorough risk assessment to identify actual and potential adverse impacts on human rights and the environment in your operations and supply chains. 
• Action Plan: Develop and implement an action plan to address, prevent, and mitigate identified risks. 

Engage with Affected Stakeholders

• Stakeholder Engagement: Actively engage with potentially affected groups, including workers, local communities, and other relevant stakeholders, to understand their concerns and perspectives. 
• Feedback Mechanisms: Establish and maintain a system for receiving and addressing feedback or complaints from affected stakeholders. 

Implement Effective Governance Structures

• Responsibility and Oversight: Assign responsibility for due diligence at a high governance level within your organization. 
• Training and Awareness: Ensure employees and management are trained and aware of the due diligence requirements. 

Ensure Transparency and Reporting

• Public Reporting: Prepare and publicly disclose an annual report on your due diligence policies, processes, findings, and actions taken. 
• Transparent Communication: Be transparent about the challenges and limitations faced in addressing adverse impacts. 

Monitor, Evaluate, and Update Due Diligence Practices

• Continuous Monitoring: Regularly monitor the effectiveness of your due diligence measures. 
• Regular Updates: Update your due diligence processes as needed based on monitoring results and evolving risks. 

Prepare for Legal Compliance and Liability

• Legal Compliance: Understand and comply with the legal obligations under the CSDDD, including civil liability provisions. 
• Documenting Compliance: Keep thorough records of your due diligence efforts to demonstrate compliance. 

Establish End-to-End Supply Chain Management

• Supply Chain Collaboration: Work collaboratively with suppliers and business partners to ensure they understand and comply with the CSDDD requirements. 
• Contractual Clauses: Include appropriate clauses in contracts with suppliers and business partners to ensure compliance with due diligence obligations. 

Develop a Responsive Strategy for Identified Risks

• Mitigation and Remediation: Develop strategies to mitigate any adverse impacts and provide for remediation where harm has occurred. 
• Ending Relationships: Be prepared to end business relationships if mitigation of adverse impacts is not possible. 

Conclusion
Compliance with the CSDDD is a crucial step towards responsible and sustainable business practices. By integrating due diligence into your business operations and addressing potential adverse impacts on human rights and the environment, your company not only adheres to regulatory requirements but also contributes positively to societal and environmental well-being.