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As part of its strategy to implement the European Green Deal and the Action Plan on Financing Sustainable Growth, the European Commission presented its proposal for a Corporate Sustainability Due Diligence Directive (CSDDD).
This paper specifically addresses the parts of the proposal that relate to corporate governance and directors’ obligations, as well as to the responsibilities of the financial sector. It intends to complement the analyses of non governmental and expert organisations on the due diligence aspects.
1. Directors’ obligations as part of due diligence
2. Directors’ obligations with regard to climate change
3. Alignment of incentives to sustainability objectives
4. Responsibilities of the financial sector
In the explanatory memorandum of the draft CSDDD, the EU Commission recalls that one of the five specific objectives of the directive is “(1) improving corporate governance practices to better integrate risk management and mitigation processes of human rights and environmental risks and impacts, including those stemming from value chains, into corporate strategies”. However, the proposal initially referred to as 'Sustainable Corporate Governance' has been presented with only a few elements to foster integration of sustainability and long-term thinking in corporate governance rules. It is important that corporate governance keeps pace with sustainable finance and the demands of stakeholders and investors, which themselves have supported the call on clarifying directors’ obligations.
Briefing supported by:
The International Sustainability Standards Board is presenting in London this Tuesday the work plan for the upcoming two years, including research projects to develop standards for companies’ reporting on biodiversity and human capital.
Today, national ministers responsible for internal market and industry voted in favour of the first reading position adopted by the European Parliament in April 2024. This approval by the Council of the EU brings to a successful close the legislative journey of the Corporate Sustainability Due Diligence Directive (CSDDD), which will now become law.
Four months after the announcement of a political agreement by negotiators from the European Parliament and the Council of the EU, and after a severe reduction of the number of companies covered last March, the EP gave today its final approval to CSDDD.
