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EU Member States in the Council reached an agreement on the Corporate Sustainability Due Diligence Directive (CSDDD) on 15 March, following months of negotiations. The agreement contains significant changes to a previous deal reached between the Council and EP back in December 2023, including the following:

• significantly narrower scope starting from 5000 employees and 1500m turnover and going down to 1000 employees and 450m after 5 years, which is estimated to decrease the total number of EU companies covered by the CSDDD from roughly 16,000 to under 5,500
• a narrower scope of chain of activities to apply due diligence: downstream chain further decreased by excluding product disposal, dismantling and recycling, as well as composting and landfilling
• elimination of the requirement for companies to provide financial incentives to their directors to promote the implementation of climate transition plans
• watered-down civil liability article making it more difficult for victims to go to Courts in case of a corporate violation

EP’s legal affairs (JURI) Committee provisionally approved the amended version of CSDDD on 19 March. MEPs expressed the sentiment that reaching any agreement on the file is preferable to having no CSDDD at all. EP Plenary has to ratify this decision through a vote during the April session.

While SMEs fall outside the scope of CSDDD, they are anticipated to experience the impact as participants in large companies’ value chains. Accountancy Europe has actively pushed for a stronger and more explicit SME support measures within the legal framework.