Once implemented, the EU’s proposed Corporate Sustainability Due Diligence Directive (CS3D), will impose an unparalleled and extensive corporate governance duty on many companies based in and outside the EU. Unlike most other ESG obligations currently in force, this will not be a “comply-explain” obligation, but a “comply or be liable” obligation. It will require action beyond mere reporting, and it comes with regulatory, civil enforcement and compensation mechanisms.
CS3D aims to foster responsible corporate behaviour by establishing risk-based environmental and human rights due diligence. This includes identifying, managing, prioritising, preventing, mitigating and eliminating adverse impacts of chains of activities on human rights and the environment by a company’s operations, their subsidiaries and business partners.