Mediaroom

After two years of intense political discussions and negotiations, the European Parliament has adopted the Corporate Sustainability Due Diligence Directive (CS3D). This directive mandates that companies with more than 1,000 employees and €450 million in global revenues assess human rights and environmental risks across their chain of activities and mitigate these risks based on severity and likelihood.

CLEPA welcomes the significant improvements made to CS3D compared to the initial proposal tabled in February 2022. The final text notably reduces legal uncertainty, aligns more closely with international standards, strengthens the role of sector initiatives, and explicitly recognises the need for companies to prioritise mitigation efforts based on risk assessment.  

Nevertheless, lacking supply chain transparency and limited control over (indirect) suppliers poses a significant hurdle for companies. Furthermore, several provisions such as stakeholder engagement and responsible disengagement introduce somewhat contradictory requirements for businesses. CS3D will therefore pose a significant implementation challenge for companies and the European Commission and supervisory authorities should help facilitate implementation, including through the forthcoming guidance.