How to prepare your SME for the Corporate Sustainability Due Diligence Directive
The Corporate Sustainability Due Diligence Directive makes large companies responsible for the damage to human rights and the environment within their value chain. As suppliers and partners of large businesses, SMEs may also be asked to prove that their operations are sustainable. Prepare now for this major new requirement.
Who does the CSDDD apply to?
Very large companies: with over 1000 employees and 450 million euro turnover worldwide. However, the CSDDD requires these very large companies to control impacts not just in their direct operations, but in their value chains as well. It is here where SMEs may be impacted.
How does CSDDD impact small & medium sized businesses?
Many SMEs form part of the value chain for large companies. Because large companies must ensure that environmental and human rights damage also does not occur in their value chains, SMEs may be asked to provide information or assurance of their own operations and value chains. These could be in the form of additional questionnaires, audits, or costs for their own risk management systems to ensure compliance.
What do large businesses need to do?
CSDDD covers a wide range of potential negative impacts, both within a company’s direct control and within their value chain of suppliers and partners. These include:
Human rights violations, such as:
Fair & equitable living wages
Worker safety
Right to form unions
Discrimination
Other major violations such as slavery, child labor
Environmental damage, such as:
Deforestation
Land degradation, such as damaging soil
Harmful pollutants or contaminants such as mercury, oil spills, or sewage
Companies directly covered by CSDDD must set up:
Risk management system
Risk assessment process
Mitigation measures for risks identified, including measures for SMEs in their supply chains
Monitoring the effectiveness of their risk management system
Other requirements include engaging stakeholders, publicly disclosing their processes, and complaints procedures.
What do small & medium sized businesses need to do?
If you have large customers, they may ask you to fill in questionnaires as part of their risk mitigation screening. If these large companies suspect that risks lie in your value chain, they may request additional assurance, an audit, or require you to implement risk management measures. These will all cost time and money to retain large customers.
Ready to take the next step?
We are very experienced in setting up risk management systems and sustainability. Show your customers that you’re a great partner and low risk by having a proactive sustainability & risk management strategy ready to go. We can help you get started today with our Quick Sustainability Assessment & Strategy offering to point you in the right direction, or 1-on-1 consulting services to help you master the questionnaires from your customers and set up risk management systems.
