The CSDDD is a new European Union (EU) regulation that establishes mandatory rules for businesses. Its objective is for companies to identify, prevent, mitigate and take responsibility for adverse impacts on human rights and the environment in their business operations and value chains.
Key points about the CSDDD:
- Timeline:
- 23 February 2022: The European Commission adopted the CSDDD proposal.
- May 2024: EU Member States formally adopted it.
- 2027: The Directive applies to very large companies (turnover > EUR 1,500 million and more than 5,000 employees).
- 2028: The Directive applies to smaller companies (turnover > EUR 900 million and more than 3,000 employees).
- 2029: The Directive applies to all in-scope companies.
- Scope and applicability:
- The CSDDD applies to large EU companies and to non-EU companies that operate in the EU.
- The groups of companies include:
- Group 1: EU companies with more than 500 employees and global turnover of more than EUR 150 million in the last financial year.
- Group 2: EU companies with more than 250 employees and global turnover of more than EUR 40 million, at least 50% of which is generated in high-impact sectors (such as textile manufacturing, agriculture and mineral resource extraction).
- Groups 3 and 4: Non-EU companies with EU turnover of more than EUR 150 million or EUR 40 million (depending on the sector and the share of global turnover generated in high-impact sectors).
- Impact on Vietnamese businesses
- Vietnamese businesses, especially those with partnerships and supply chains linked to the EU, need to adapt to meet the requirements of the CSDDD.
- This includes strengthening audit processes and ensuring compliance through contractual measures and/or compliance verification measures such as ESG Due Diligence or Compliance Audits.
Actions for Vietnamese Businesses Affected by the CSDDD
As the CSDDD comes into application, Vietnamese businesses need to take the following actions to meet the new requirements:
- Build and Improve the ESG Management System:
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- Businesses need to review and optimise their environmental, social and governance (ESG) management systems. This includes ensuring compliance with sustainability-related standards and regulations.
- Strengthen Internal and Partner Controls:
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- Internal and partner control processes need to be strengthened. This helps ensure that business activities do not have adverse impacts on the environment and human rights.
- ESG Due Diligence and Compliance Audits are useful tools in this process.
- The CSDDD and Opportunities for Vietnamese Businesses:
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- Complying with the CSDDD is not only a legal obligation but also an opportunity to enhance reputation and competitiveness in international markets.
- Businesses can leverage sustainable actions to gain an advantage and attract the interest of customers and partners.
The CSDDD marks an important step forward in promoting corporate responsibility for the environment and society. Adapting and implementing concrete measures will help Vietnamese businesses contribute positively to the sustainable development of both society and the economy.
VietESG is ready to provide services to support Businesses as the CSDDD comes into application:
- Training on methods for building an ESG system transformation strategy aligned with the CSDD requirements
- Certification of Businesses achieving ESG maturity – aligned with CSDD objectives
Contact us for direct support:
ESG Expert Phạm Quốc Hung – General Director of VietESG.
Email: quynhhoa@vietesg.com
Phone: 0969060290
