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Due Diligence in the EU
We bring you all what you need to know, to be able to comply with the upcoming European Union's Due Diligence Directive.
Due Diligence Managers, Compliance Managers
Sustainability, ESG, CSR Directors
Legal Councels, CFOs, VPs, SVPs
CEOs
What is Due Diligence?
Due diligence is a comprehensive and systematic process that organizations undertake to assess and verify their compliance with legal, regulatory, and ethical requirements. It involves conducting thorough investigations, assessments, and audits to ensure that all aspects of a company's operations, policies, and practices align with applicable laws and regulations. Through due diligence, companies can identify potential risks, gaps, or non-compliance issues and take appropriate measures to address them. It serves as a proactive approach to mitigate legal and reputational risks, foster transparency, and demonstrate a commitment to responsible and compliant business practices.
Legal and Regulatory Compliance
This component focuses on ensuring that the organization complies with all applicable laws, regulations, and industry-specific requirements. It involves evaluating whether the company's operations, practices, and policies adhere to legal obligations, such as data protection, employment, consumer protection, and environmental regulations.
Risk Assessment and Mitigation
This component involves identifying and assessing potential risks that may impact the organization's compliance efforts. It includes analyzing internal processes, third-party relationships, supply chains, and other relevant factors to identify areas of vulnerability or non-compliance. Subsequently, appropriate measures are taken to mitigate and manage those risks effectively.
Ethical and Responsible Business Practices
This component emphasizes the organization's commitment to ethical conduct and responsible business practices. It involves evaluating the company's values, code of ethics, corporate social responsibility initiatives, and sustainability practices. This component also considers factors such as human rights, labor standards, environmental impact, and community engagement.
What is EU's Corporate Sustainability Due Diligence Directive (CSDDD)?
The EU's proposed Corporate Sustainability Due Diligence Directive (CSDDD) is aimed to emphasize more significant corporate responsibility, improve due diligence standards and corporate governance in sustainability domains including human rights, and help stakeholders with their rights to access remedies.
For citizens
Better protection of human rights, including labour rights.
Healthier environment for present and future generations.
Increased trust in businesses.
More transparency enabling informed choices.
Better access to justice for victims.
For companies
Harmonised legal framework in the EU, creating legal certainty and level playing field.
Greater customer trust and employees’ commitment.
Better awareness of companies’ negative environmental and human rights impacts.
Better risk management and adaptability.
Increased attractiveness for talent, sustainability-oriented investors and public procurers.
Higher attention to innovation.
Better access to finance.
For developing countries
Better protection of human rights and the environment.
Increased stakeholder awareness on key sustainability issues.
Sustainable investment.
Improved sustainability-related practices.
Increased take-up of international standards.
Improved living conditions for people.
When is EU Due Diligence Directive Coming?
On 23 February 2022, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence. The aim is to foster sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe. The proposal will go to the European Parliament and the Council for approval. Once adopted, Member States will have two years to transpose the Directive into national law and communicate the relevant texts to the Commission.
What does EU Due Diligence Directive mean for you and your business?
This Directive establishes a corporate due diligence duty. The core elements of this duty are identifying, bringing to an end, preventing, mitigating and accounting for negative human rights and environmental impacts in the company’s own operations, their subsidiaries and their value chains. In addition, certain large companies need to have a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C in line with the Paris Agreement. Directors are incentivised to contribute to sustainability and climate change mitigation goals. The Directive also introduces duties for the directors of the EU companies covered. These duties include setting up and overseeing the implementation of the due diligence processes and integrating due diligence into the corporate strategy. In addition, when fulfilling their duty to act in the best interest of the company, directors must take into account the human rights, climate change and environmental consequences of their decisions. Here are the topics which could be impacting your compliance to CSDDD:
Climate Change
Climate change domains including Energy & emissions, Risks & Adaptation, Technology and Government responses are among the key topics.
Human Rights
Human rights subjects include Community relations, land & property, UN Declaration rights, Child labour, forced labour, and modern slavery.
Foundations
To have a solid foundation, Corporate structure & responsible tax, Stakeholders, and Management systems are among key topics to attend.
Natural Resources
Use and management of Natural resource, Biodiversity and Ecosystems are among the key topics in this domain.
Health, Safety & Security
Health and safety at work, Geopolitics, Conflict and crime, and Product Compliance are key topics in this domain.
Business Ethics
Business ethics is about Business partners, Fraud, corruption, Competition, Data privacy, Sanctions, Trade and Anti Money Laundering (AML).
Ambient Environment
Ambient environment includes topics such as Air and water, Waste and contamination.
Working Together
Wages and hours, Freedom of association, Non-discrimination, are core in this area.
Learn More
Please register here, should you want to know more.
Complimentary Guide
Are you wondering if the European Union's proposed Corporate Sustainability Directive (CSDDD) is relevant for you? Are you unsure how to prepare for what is coming?
Learn all you need to know about CSDDD in our complimentary guide. We keep this guide updated. Hence register once and get updates to this guide automatically, as we publish revisions of it.
Compliance AI
Ask any question you may have about the Corporate Sustainability Due Diligence Directive from our AI Assistant.
CSDDD News
Firms to tackle impact on human rights and environment
The Legal Affairs Committee of EU Parliment agreed on 25 Apr 2023 on new rules to integrate human rights and environmental impact into companies’ governance.
European Parliament may bring financial sector to CSDDD
A draft report adopted by JURI indicates the European Parliament may move to bring the financial sector within the scope of the Corporate Sustainability Due Diligence Directive (CSDDD).
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