What is the difference between CSDDD and CSRD?

In the last period, the EU emphasized the effort to become climate neutral by 2050 through the European Green Deal. This policy package improves sustainability in environmental, social and governance areas (ESG).

These directives include the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), which require companies to share sustainability information. Instead of choosing which data to publish, they must provide comprehensive reports on all issues related to their activities.

CSRD and CSDDD are interconnected and complement each other. In this blog, we will look at how they work together, how they differ, and what they mean for building a sustainable economy. Read on to learn more.

CSDDD and CSRD have a common goal – to ensure the transparency of companies within the entire supply chain. Let's look at their differences.

Directive CSDDD (Due care for business sustainability):

European Parliament and Council Directive (EU) 2024/1760

– Obligations: The CSDDD sets out specific due diligence steps that companies must perform. These companies are legally bound to investigate and address the impact of their operations and supply chains on the environment and human rights.

- Global reach: This directive applies to companies both inside and outside the EU, including their international activities and sourcing.

– Prevention of harmful impacts: CSDDD focuses on companies actively preventing or minimizing negative impacts on the environment and human rights.

CSRD (Corporate Sustainability Reporting) Directive:

Directive (EU) 2022/2464 of the European Parliament and of the Council

- Reporting framework: CSRD provides guidelines for how companies should report their sustainability efforts, following European standards (ESRS).

– Focus on the EU: This directive is intended for companies operating within the EU.

– Transparency and disclosure: The main objective is to ensure consistent and comparable ESG performance reporting, providing stakeholders with a clear view of the company's sustainability.

Similarities of CSDDDD and CSRD:

Both directives are inspired by the OECD Guidelines for Multinational Companies and the UN Guiding Principles on Business and Human Rights. If you're already following these guidelines, you're well on your way to fulfilling them.

In conclusion, the CSDDD requires companies to adopt environmental and social responsibility, while the CSRD ensures transparency of these efforts within the EU. Companies should apply these guidelines together if they both apply. Think of CSDDD as a tool that helps businesses not only meet their sustainability obligations, but also meet CSRD reporting requirements, providing a comprehensive picture of their sustainability and responsibility. (Co2AI)