Corporate sustainability due diligence

24th February 2022

On 23 February 2022, the European Commission unveiled a proposal for a Directive on corporate sustainability due diligence, whose aim is to encourage sustainable and responsible corporate behaviour as well as to put human rights and environmental considerations at the core of companies’ operations and corporate governance.

These new rules introduce a corporate due diligence duty as well as a duty for directors to integrate due diligence as part of the company strategy.

The rules apply to EU large limited liability companies as well as to non-EU companies active in the EU with specific turnover thresholds. This includes financial firms and funds in the current drafting of the proposal.

Certain large companies will also need to have a plan to ensure that their business strategy is compatible with the goal of limiting global warming to 1.5 °C as set out in the Paris Agreement.

Importantly the proposal also includes specific civil liability provisions for companies as well as sanctions for infringements.

What remains to be seen is to assess how this proposal will operate together with existing duties under sectoral legislation and the Sustainable Finance Disclosure Regulation.

The Zeidler ESG legal advisory team will keep you updated on any developments. For any specific queries on this matter, please contact us.

Read the press release here. Read the text of the proposal here.


Elisa Forletta-Fehrenberg