The CS3D aims to tackle the complexities of modern supply chains, requiring companies to take proactive steps to prevent human rights abuses and environmental harm linked to their operations. Key obligations under the directive include integrating due diligence into corporate policies, identifying adverse impacts, and establishing mechanisms for remediation in cases of non-compliance. Notably, the directive will apply to larger companies with at least 1,000 employees and significant annual revenues, with the scope gradually expanding to smaller entities by 2029.
In advance of CS3D, Germany enacted its own supply chain law, the Lieferkettensorgfaltspflichtengesetz (LkSG), which may require adjustments in response to the new EU legislation. Critics of CS3D have raised concerns about potential economic burdens, increased compliance costs, and the risk of deterring investment, particularly from smaller firms or those in developing countries.
Looking ahead, companies must assess their obligations under CS3D and prepare for compliance by enhancing transparency and cooperation throughout their supply chains. This will involve updating internal policies, conducting audits, and possibly severing ties with non-compliant partners to mitigate liability risks. As the EU moves forward with this significant directive, businesses will need to adapt swiftly to navigate the evolving landscape of corporate sustainability obligations.