Directive on the duty of vigilance: the path of compromise prevails
On 24 April 2024, the European Directive on the duty of vigilance (Corporate Social Due Diligence Directive – CSDDD) was finally voted by the European Parliament before the European elections (cf.CSDDD: Deferred vote on the European Directive on due diligence) with 374 votes in favour and 235 against. After many debates, Governments have come back to the latest proposed amendments and have reduced the scope of the text. The application thresholds have been revised downwards. Whereas the earlier clauses concerned companies with 500 employees with a net turnover equal to or greater than EUR 150 million, the latest version only applies to companies with a net turnover of EUR 150 million.enterprises with more than 1000 employees with a turnover of over EUR 450 million. Companies with more than 250 employees operating in the so-called risk sectors are also exempt from obligations. Such changes bring the percentage of undertakings concerned to 0,05 %.
Obligations retain the original spirit. Companies must prevent, stop or mitigate their negative impacts on human rights and the environment at each stage of their value chain, or they may face a penalty of up to 5% of their turnover.
The deadline for implementation will be phased in according to the size of the company, with the first deadline being set for 2027.
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