The CSDDD

What happens if companies don't comply with CSDDD?

Non-compliance with the Corporate Sustainability Due Diligence Directive (CSDDD) can lead to significant consequences for companies, including: Administrative sanctions: Regulatory authorities designated by EU Member States can impose fines and compliance orders. The provisional agreement suggests fines up to 5% of a company's net turnover for non-compliance. Civil liability: Victims of non-compliance with CSDDD obligations have the right to apply for compensation for damages resulting from a company's failure to meet due diligence requirements. Loss of business opportunities: Compliance with the CSDDD may become a criterion for awarding public contracts and concessions, meaning non-compliant companies could miss out on potential business. Reputational damage: Non-compliance can harm a company's reputation, leading to loss of customers, investors, and employees. Negative impact on supply chain: Companies may be required to terminate relationships with business partners who have adverse environmental or human rights impacts that cannot be mitigated, potentially disrupting their supply chain. Additionally, the documents highlight potential negative consequences for small and medium-sized enterprises (SMEs) outside the direct scope of the CSDDD: Unfair practices by larger companies: SMEs could face unfair contracting practices, inappropriate information requests, or abrupt termination of relationships with larger companies seeking to comply with the CSDDD. Overall, the documents emphasize the importance of proactive compliance with the CSDDD to avoid these negative consequences and ensure sustainable business practices.

What are the risks and benefits of the CSDDD for smallholder farmers?

"Potential Benefits: Improved protection of human rights: The CSDDD can lead to better protection of smallholder farmers' human rights, including fair treatment, safe working conditions, and access to resources. More equal relationships: The directive may foster more equitable relationships between smallholder farmers and buyers, promoting collaboration, shared responsibility, and fair purchasing practices. Increased market access: By complying with the CSDDD, smallholder farmers may gain access to new markets that prioritize sustainable and ethical sourcing. Potential Risks: Buyer disengagement: Some buyers might disengage from smallholder farmers due to the increased due diligence requirements and potential risks associated with non-compliance. Cascading compliance requirements: The costs and burdens of compliance may be passed down the supply chain, disproportionately affecting smallholder farmers who may lack the resources to meet these requirements. Exclusion from value chains: Smallholder farmers who cannot meet the CSDDD's requirements may be excluded from global value chains, losing market access and income opportunities. Mitigating Risks and Enhancing Benefits: To mitigate these risks and maximize the benefits for smallholder farmers, the document recommends several actions: Developing accompanying measures: The EU and member states should develop supportive measures to help smallholder farmers understand and comply with the CSDDD. Providing financial and technical assistance: Financial and technical support should be offered to smallholder farmers to help them implement sustainable practices and meet the directive's requirements. Promoting inclusive dialogue: Stakeholders, including smallholder farmers, should be actively involved in the implementation process to ensure their voices are heard and their concerns are addressed. By addressing these risks and taking proactive measures, the CSDDD can potentially create a more sustainable and equitable future for smallholder farmers, while promoting responsible business conduct throughout global supply chains."