The European Parliament today passed a historic law, marking a significant step towards holding big companies accountable for harm they cause to people and the planet.
The Corporate Sustainability Due Diligence Directive (CSDDD), will require large companies operating in the EU to take a hard look at the impact they are having on communities and the environment and oblige them to prevent and address harm caused.
As the EU is a major player on the global economic stage, the implementation of this law has the potential to create a ripple effect that reaches far beyond its borders.
Global Witness has been championing this cause from the beginning, pushing for greater corporate responsibility and justice for affected communities.
While there are a lot of gaps to fill in the law, the CSDDD will help level the power imbalance between profit-driven companies and the communities they impact.
What will companies have to do under the CSDDD?
The CSDDD obliges the biggest companies operating in the EU to prevent and address harm they may be causing or contributing to along their value chains anywhere in the world.
They will do this using a risk-based approach, prioritising their most severe harms. Under the law a large mining company would now be required to first look at their value chain and identify the most serious impacts, such as how communities living nearby to mining sites they operate are affected, or how the local environment could be damaged.
Large companies will now also be required to implement climate transition plans to align their business strategies with the goals of the Paris Agreement.
This is a major step towards combating the climate crisis by requiring companies to mitigate their climate impacts and reduce their carbon emissions, including by setting time-bound targets and a list of actions needed to achieve them.
The new rules will apply to EU companies with over 1000 employees and over €450 million in turnover worldwide, as well as non-EU companies with over €450 million in turnover in the EU.
The implementation of the law will be staggered. The biggest companies in the EU – with over 5,000 employees and €1.5 billion in turnover – will need to be compliant by 2027, followed by companies with 3,000 employees and €900 million in turnover in 2028 and finally companies with at least 1,000 employees and €450 million in turnover in 2029.
What will the law mean for communities threatened by corporate harm?
Communities will now enjoy legal safeguards to make sure that they aren’t intimidated into accepting dangerous projects on their doorstep.
Last year, we revealed how the construction of a new airport in the Philippines displaced hundreds of residents after a coercive consultation process in which armed soldiers were sent door-to-door, leaving community members describing feeling “terrified”. Two Dutch companies were involved in the first phase of the project.
Had the CSDDD been in force, these companies would have had to make sure that residents were engaged with in a meaningful and safe way, including not fearing retaliation for raising concerns about the project.
If companies don't meet the requirements set out in the law, communities will have the power to take legal action against them in the EU. They can also seek redress or compensation directly from the company, but this wouldn’t prevent them from pursuing legal action if necessary.
How did we get here?
Big changes like these that can fundamentally shift corporate behaviour and wrongdoing take time, resources and patience. It took a great deal of effort to get to this point, and at times it seemed like an impossible feat.
Civil society played a vital role in putting this issue on the agenda and pushing for change in the face of powerful corporate lobbying efforts.
As Global Witness, we toured EU embassies, published hard-hitting investigations, and demonstrated the large-scale public support for this law. We provided in-depth analysis and recommendations to policymakers to ensure that the law serves communities and defenders around the world. Together with a broad network of NGOs and experts, we joined forces and worked in solidarity to get this law off the ground.
What needs to be improved?
Along the way, we also lost some battles. Most recently, after a final agreement on the law had already been struck in December 2023, EU countries such as Germany, France and Italy torpedoed the deal and significantly weakened it.
The number of companies covered was reduced by almost two thirds, limiting the law’s reach. The earlier deal would also have required more companies in high-risk sectors such as mining or construction to comply with the law.
We have shown from the outset that the financial sector plays a major role in financing harmful projects. Yet after a successful lobbying campaign, banks were able to secure a complete exemption from the due diligence obligations that other companies will have to follow – although the EU Commission will review this in 2026.
And there are no legal tools to force companies to act on climate. If companies don’t act on their climate plans, it won’t be possible to take them to court.
What’s next?
While the CSDDD did not deliver everything we hoped for, it is a significant milestone in the fight for corporate accountability and justice for those who have been impacted by corporate harm.
EU countries now have two years to transpose the law into their own legal systems, with the largest companies having to comply with the law from 2027.
As we move forward, we will continue to work towards a fairer and
more sustainable future, where companies are held accountable for their actions
and the rights of communities and the environment are put before greed and
profit.