Directive on Corporate Sustainability Due Diligence

On Wednesday, 23 February 2022, The European Commission adopted a Directive on corporate sustainability due diligence. Another tool to help reach the objectives of the EU Green Deal, next to other instruments such as the EU Taxonomy and CSRD.

What is it?

The Directive aims to improve the EU regulatory framework on company law and corporate governance. It will set out a horizontal framework to foster the contribution of businesses with respect to human rights and environmental considerations in their own operations and through their value chains. It will enable companies to focus on long-term sustainable value creation rather than short-term benefits.

What is expected from companies?

Companies have to identify, prevent, mitigate and account for their adverse human rights, and environmental impacts. Besides, companies need to have adequate governance, management systems, and measurements in place.

Why?

The European Commission wants to stimulate positive change in corporate behavior towards society and the environment. They want to reduce the risk of greenwashing, divergence, and piecemeal adoption by member states. The Directive aims to better align the interests of all stakeholders in society and help companies manage sustainability-related matters in their own operations and value chains on topics such as social and human rights, climate change, and the environment.

Author
Johanna Schijvenaars

Johanna Schijvenaars

Consultant, Sustainalize

Published on: 23 februari 2022

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