Home Corporate Communication News Supply chains, green light to the EU Directive on Due Diligence

Supply chains, green light to the EU Directive on Due Diligence

The text which aims to mitigate the impact on human rights and the environment 'from upstream to downstream', including transport and storage, has been officially adopted

Supply chains, green light to the EU Directive on Due Diligence

Supply chains, green light to the EU Directive on Due Diligence The European Council has given its approval to the European Directive on Corporate Sustainability Due Diligence (CSDD ) with respect to supply chains, the last necessary step in the legislative process for its entry into force after the green light from the European Parliament last April 24th.

After the signature of the President of the European Parliament and that of the President of the Council, the legislation will in fact be published in the European Journal and will come into force on the twentieth day following; after which, Member States will have two years to implement the rules and administrative procedures necessary to comply with this legal text.

The new directive will require companies - starting from 2025 and gradually according to their size - to verify their supply chains , in particular in relation to respect for human rights and environmental protection , also establishing possible sanctions against those who violate obligations.

The rules affect not only the operations of companies, but also the activities of their subsidiaries and those of their business partners along the chain of activities, downstream and upstream, including warehousing and transportation.

Companies affected by the directive will also be required to adopt and implement a climate transition plan in line with the Paris Agreement on climate change.

The directive will apply depending on the size of the companies following a gradual progression linked to the size of the company :

  • within 3 years of its entry into force, to companies with more than 5,000 employees and 1,500 million euros in turnover.

  • The following year it will be extended to those with over 3 thousand employees and 900 million euros in turnover,

  • and then apply, the following one, to companies with more than 1,000 employees and 450 million euros in turnover.

Member States will have to establish or designate a supervisory authority to monitor and, where appropriate, sanction non-compliance with the rules, for example by fining companies responsible for violations with fines of at least 5% of global net turnover.

As reported by various sources, no member state opposed the final approval, but ten countries (Belgium, Bulgaria, Czech Republic, Germany, Estonia, Lithuania, Hungary, Malta, Austria, Slovenia) abstained. (Source: https://www.supplychainitaly.it/ )

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