Global implications of due diligence acts
Hot Topic |ÌýApril 2025
Proposed changes to the EU’s CSDDD aim to simplify due diligence requirements.
April 2025 update: The EU’s Omnibus ‘stop the clock� proposal, which is being fast-tracked through the EU legislative due process, has now been agreed to by EU legislators. This proposal postpones initial application of the Corporate Sustainability Due Diligence Directive (CSDDD) by one year for the largest companies. To become effective, this proposal needs to be published in the Official Journal of the EU and transposed into the national law of Member States.
Besides the ‘stop the clock� proposal, the Omnibus Initiative, launched by the European Commission in February, also included substantive proposals to reduce due diligence requirements for companies operating in the EU � including reducing the number of business partners and stakeholders to consider and reducing the required frequency of monitoring exercises. These proposals will take longer to go through the EU legislative due process.
Our Hot Topic has been updated to discuss the progress of these proposals through the EU legislative due process.
Applicability
- The European Commission’s applies to companies that meet certain employee, revenue and/or royalty thresholds.Ìý
- The published in February 2025 includes proposals that would amend the CSDDD.
Effective dates
Based on the CSDDD, as originally entered into force.ÌýRead our Hot Topic to understand how the following table would be impacted by the Omnibus proposals.
Ìý | Compliance with non-reporting related due diligence obligations | Reporting on due diligence obligationsÌý |
Wave 1
| July 26, 2027 | 2029 |
Wave 2
| July 26, 2028 | 2030 |
Wave 3
| July 26, 2029 | 2030 |
Key impacts
Due diligence obligations cover the value chain
- The CSDDD introduces due diligence obligations for companies related to actual and potential adverse human rights and environmental impacts.
Scoping applies to both EU and non-EU companies
- Non-EU companies (or groups) are in scope (irrespective of whether they have subsidiaries or branches in the EU) if, for two consecutive financial years (the financial year preceding the last and the financial year prior to that), theyÌýhad:
- > �450M net turnover in the EU; or
- > â‚�80M net turnover in the EU and > â‚�22.5M royalties in the EU from franchising or licensing agreements in the EU.Ìý
A transition plan must be adopted
- To contribute to combating climate change, companies must adopt a transition plan for climate change mitigation that is, through best efforts, compatible with the transition to a sustainable economy and the limiting of global warming to 1.5 degrees Celsius in line with the Paris Agreement.Ìý Ìý ÌýÌý
Obligations complement other EU legislation � particularly the CSRD
- The CSDDD reporting obligation can be covered by reporting under the Corporate Sustainability Reporting Directive (CSRD), and the CSDDD’s obligation to adopt a transition plan complements the CSRD’s transition plan reporting obligation.Ìý
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Sustainability in the EU - Global implications of due diligence acts
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