How can Ravenscroft and Schmierer assist with CSDDD matters?

Ravenscroft and Schmierer advises on compliance, supply chain risk, and litigation exposure under the CSDDD.

Does Ravenscroft and Schmierer assist with supply chain audits?

Yes. Ravenscroft and Schmierer assists companies in assessing and structuring supply chain compliance.

Can Ravenscroft and Schmierer advise on enforcement and civil liability risks?

Yes. Ravenscroft and Schmierer advises on enforcement risk and civil liability under the CSDDD.

EU Corporate Sustainability Due Diligence Directive (CSDDD) – Much the Same as the German LKSG but with Nuances

Q: What is the EU Corporate Sustainability Due Diligence Directive?

It is an EU directive imposing due diligence obligations to protect human rights and the environment across company supply chains.

Q: How does the CSDDD differ from the German LKSG?

The CSDDD has broader territorial scope and extends obligations to downstream business partners.

Q: Does the CSDDD apply to non-EU companies?

Yes. Companies from third states may be subject to the CSDDD if threshold conditions are met.

Q: Does the CSDDD introduce civil liability?

Yes. The directive introduces a civil liability regime allowing affected persons to bring claims.

Stefan Schmierer
Aug 29, 2024
4 min read

Updated: Mar 30

Author: Stefan Schmierer, Managing Partner

Professionals in the field of sourcing goods and materials, and selling these in, among other countries, Germany, are by now familiar with the acronym “LKSG”, the Lieferkettenschutzgesetz. This German law provides that a company is responsible for its supply chain and must ensure that certain universal rights are protected in this supply chain. Similar supply chain related laws exist in other countries, such as Australia, France, UK, the Netherlands, USA, Norway, etc., and meanwhile the European Union has also followed suit. This article points out some of the differences to keep in mind, as compared to the LKSG.

Background of the EU Corporate Sustainability Due Diligence Directive

On 24 April 2024 the European Parliament passed the European Corporate Sustainability Due Diligence Directive (CSDDD), and all EU member states must implement this directive into national law within the next two years, i.e. on or before 2026. Unlike a “Direction”, which immediately after its passing becomes binding law in the entire EU, a directive is an order from the EU to all member states to implement certain regulations into national law. The implementation is thus left to the national states, and it is important to point out that the regulations found in the Directive pose only the minimum requirements on the member states. This means that each member is free to implement harsher and more stringent regulations in its national law, but a member state can never implement a national law that possesses reduced or more lenient content compared to the Directive.

Scope of Application Compared with the LKSG

As other supply chain laws, the new CSDDD applies only to companies that reach a certain size (Art. 2). From 2027 CSDDD related laws will be applicable to companies with at least 5,000 employees at first; by 2029 a reduction of the threshold is expected to 1,000 employees. However, unlike the German LKSG, which only applies to entities that are founded or have a place of management in Germany, the CSDDD applies indiscriminately to companies from third states outside of the EU as well (Art. 2 (2)).

Protected Rights and Climate Change Obligations

The protected rights under the CSDDD are comparable to the LKSG and other similar laws and are listed in Annex 1 and Annex 2 of the CSDDD as published by the European Parliament. Instead of listing these rights one by one, the CSDDD refers to several international conventions and should pose no surprises to people familiar with already existing laws. A new aspect is brought in by Art. 22, which contains provisions related to climate change.

Expansion of Supply Chain Coverage

A significant change and elongation of existing laws is the definition of “business partner” and “chain of activities” in Art. 3 (1). Looking at the LKSG, the LKSG puts an obligation on its addressees to supervise their upstream business partners. However, the LKSG does not impose any obligation on downstream business partners. This is now changing with the CSDDD, which in Art. 3 (1) (f) includes the downstream market as a protection area, significantly extending the application of the EU Corporate Sustainability Due Diligence Directive.

Direct and Indirect Business Partners

Other significant differences to the LKSG are the obligations a company has towards indirect business partners. Under the LKSG, obligations apply only where there is knowledge of a violation. Under the CSDDD, however, no clear distinction is made between direct and indirect partners, meaning companies should consider monitoring indirect business partners as carefully as direct ones.

Enforcement, Civil Liability, and Procedural Changes

Breaches of the CSDDD shall be reported to national authorities who are obliged to investigate and impose sanctions. In addition, Art. 29 provides for civil liability, allowing damaged parties to bring direct claims against companies. The CSDDD provides for a five‑year limitation period starting from the date when the person knows of the right to bring legal action (Art. 29 (3) (a)) and introduces a discovery process (Art. 29 (3) (e)), a concept largely unfamiliar to continental European legal systems.

Conclusion

In summary, the EU Corporate Sustainability Due Diligence Directive does not introduce major surprises for companies already subject to the LKSG or similar legislation. However, the expanded obligations and extended scope make it clear that the administrative and compliance burden will increase.

How Ravenscroft & Schmierer Can Help?

The EU Corporate Sustainability Due Diligence Directive introduces complex and far‑reaching supply chain obligations across jurisdictions. Ravenscroft & Schmierer advises companies on implementation strategies, supply chain compliance, civil liability exposure, and cross‑border regulatory risk under the CSDDD.

If your business operates in or with the EU and must prepare for CSDDD implementation, contact us to discuss your circumstances and available options.

FAQ: EU Corporate Sustainability Due Diligence Directive (CSDDD)

What is the EU Corporate Sustainability Due Diligence Directive?

It is an EU directive imposing due diligence obligations on companies to protect human rights and the environment across supply chains.

How does the CSDDD differ from the German LKSG?

The CSDDD has broader territorial reach and includes downstream business partners.

Does the CSDDD apply to non‑EU companies?

Yes. Companies from third states may also fall within scope if threshold requirements are met.

Does the CSDDD introduce civil liability?

Yes. Art. 29 provides a civil liability mechanism for protected persons.

How can Ravenscroft & Schmierer assist with CSDDD compliance?

Ravenscroft & Schmierer advises on implementation, compliance framework design, and regulatory risk under the CSDDD.

Does Ravenscroft & Schmierer assist with supply chain audits?

Yes. We assist with assessment and structuring of compliant supply chain due diligence systems.

Can Ravenscroft & Schmierer advise on civil liability exposure?

Yes. We advise on enforcement, litigation risk, and procedural implications introduced by the CSDDD.

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

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