Corporate Sustainability Due Diligence Directive (CSDDD)

It is often called the EU supply chain law. Covered companies must integrate due diligence into their policies and risk management, map where harms are likely, prioritise the most severe, and take steps such as contract terms, supplier support, investment or, as a last resort, ending the relationship. They must also set up a complaints process, monitor effectiveness and report publicly. Some companies must adopt a climate transition plan consistent with limiting warming to 1.5 degrees. Supervisory authorities can impose penalties, and the directive provides for civil liability where harm results from a failure to comply. Scope and timing have been narrowed and delayed in later EU decisions. It builds on the UN Guiding Principles and the OECD guidelines. Legal, procurement and sustainability teams meet it as a supplier diligence programme. Companies now face fines and possible damages claims if their supplier checks turn out to be paper exercises.

A large European machinery group falls within the directive. It maps its supplier base, finds that its highest risks are forced labour in one metals supply chain and pollution at a chemicals supplier, and adds diligence clauses to contracts. It sets up a grievance channel in six languages and reports its actions in its annual report.