A watered-down version of the Corporate Sustainability Due Diligence Directive with limited GO market impact approved by Parliament

On 14 December 2023, the Council of the EU and the Parliament reached a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD), with the Council’s endorsement of the weakened version on 15 March 2024 followed by Parliament’s backing on 24 April 2024. The Directive will introduce mandatory due diligence obligations on both EU and non-EU companies and lay out liability rules for companies violating these obligations.

Importantly, CSDDD-affected companies will need to adopt decarbonisation plans consistent with the Paris Agreement 1.5C pathway. The revised text results in a more limited application scope, reducing the pool of the affected companies by 70% from the Commission’s initial proposal, less potential to incentivise GO demand.