- Almost 80% of those surveyed believe the demands of the EU Supply Chain Act are manageable.
- Most companies have already launched initiatives to comply with the Act.
- Despite the majority prioritizing environmental and social improvements within their supply chains, three out of four acknowledge facing significant challenges in implementing these changes.
- 23% view the regulation primarily as a risk, citing non-EU companies’ exemption from these obligations as a potential competitive disadvantage.
- 52% of respondents foresee the directive leading to low additional costs, while 18% anticipate (high) additional expenses.
Study on the EU supply chain law: How well prepared are companies?
The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) will take effect on July 25, 2024. EU Member States have two years’ time to incorporate the CSDDD into their national laws. There is now more clarity for companies. Who falls within the scope of the Directive will need to comply according to a phased schedule, starting from July 2027 and extending to July 2029. Many European businesses, which are on the front lines of implementing the Corporate Sustainability Due Diligence Directive (CSDDD), had already started preparing for the regulations. Our study sheds light on how far they have come and explores the complexities and challenges encountered.
Officially known as the Corporate Sustainability Due Diligence Directive, the groundbreaking legislation would mandate that a significant portion of European companies shoulder responsibility for social and environmental concerns throughout their entire supply chain. In 2020, all 27 member states of the EU agreed to create such regulation.
An opportunity with a cost and challenges in implementation
INVERTO’s analysis delves into the readiness of German and French companies to comply with the CSDDD, comparing it to the existing national regulations in Germany and France. The study, which surveyed roughly 350 participants from each country at the end of 2023, offers comprehensive insights on the journey towards more ESG compliant supply chains. The results and recommendations for action are freely available for download.
In addition to an English version, which presents the results of the study using France and Germany as examples for the EU countries concerned, there are also versions available in French and German targeting the respective markets.
Download the appropriate study results
Result presentation based on over 650 respondents from Germany and France as EU-member states representatives. Please fill in the form to receive the results:
Result presentation based on over 350 French participants across different industries (partly with comparison to German participants).
Result presentation based on over 330 German participants across different industries (with comparison to over 350 French respondents).
Result presentation tailored to the healthcare industry.
The CSDDD requires companies within its scope to identify, evaluate, prevent, mitigate, address, and remedy impacts on both people and the planet caused by their operations and those within their value chains. These impacts include issues such as child labor, slavery, pollution, emissions, deforestation, and ecosystem damage. This legislation represents a significant shift towards greater corporate accountability in the global marketplace, aiming to ensure that companies not only pursue profits but also contribute positively to society and the environment – in Europe and worldwide.
Who is affected by the CSDDD and what are the requirements?
By 2029 the directive will target European companies with over 1.000 employees and a global turnover exceeding 450 million euros. Third-country companies operating in the European Union are also affected. Additionally, Franchise companies which are based in the EU with a turnover exceeding 80 million euros are affected if at least € 22.5 million euros are generated through license fees (For non-European franchise companies, thresholds refer to turnover generated in the EU).
What must companies consider to be compliant with the EU Supply Chain law?
Companies are required to conduct due diligence with direct suppliers across their supply chains, identifying and addressing impacts on human rights and the environment, integrating due diligence into corporate policies and management systems, establishing grievance mechanisms, and providing transparent reporting on their due diligence practices. The activity chain comprises the activities of the upstream and parts of the downstream value chain. In the downstream value chain, transportation, storage and distribution are only considered in direct business relationships, whereas the disposal of products is completely exempt from audits.
EU companies and parent companies > 5,000 employees; turnover (global or generated in the EU) > € 1.5bn
EU companies and parent companies > 3,000 employees; turnover (global or generated in the EU) > € 900mn
- EU companies and parent companies with > 1,000 employees; turnover (global or generated in the EU) > € 450mn
- Franchise companies based in the EU with turnover > € 80mn if at
least € 22.5mn generated through license fees (For non-European franchise companies, thresholds refer to turnover generated in the EU)
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