🌱 CSDDD: What do we need to know?
Featuring Brightest, Baileys, Morrisons, Cano Water and more
Happy Tuesday!
You know we like to suit up and get serious to start the week off, well what’s more serious than a new EU directive? Whether your brand is operating in the EU or not, sustainability regulations from there tend to have a ripple effect across the wider sustainability world. That’s why we are breaking down CSDDD for you today!
As usual, we will follow-up with a jam-packed edition of The Good(s) News, which includes a new packaging format by Baileys and an recycling announcement from Morrisons.
Let’s dive in…
> In Focus
CS-triple-D
by Rosalin Brolly
Last Friday (24/5/24), EU Member States adopted the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D). While its name might sound like a new artist on the Spotify Hot Hits playlist, CS3D promises to be a game-changer for corporate sustainability. This directive ensures that corporations can no longer sweep their supply chain issues under the rug. Let’s break it down:
Corporate Sustainability Due Diligence Directive (or CSDDD/CS3D for short) “aims to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.”
The directive will support businesses' role in the transition to a sustainable economy. Why does it need this support? Companies looking only at the sustainability of their own operations are not really taking responsibility for their products’ full impact. Supply chains often contribute 60-90% of the environmental impact of a company and this directive will help draw attention to that and also push the largest businesses to take action. Corporate sustainability due diligence has been slow-moving due to the complexities of global supply chains and fragmentation of national laws, CS3D is a vehicle to accelerate the progress on these processes.
Despite some loopholes, such as uncertainties regarding its application to financial service companies and the removal of the explicit requirement for directors to consider sustainability in their decisions, the directive has garnered broad support from stakeholders. The clear message it sends is that “Europe will no longer tolerate profit-making at the expense of people and the planet.”
Who does it apply to?
The directive applies to both:
Large EU-based companies and partnerships with over 1000 employees and over €450 million in net global turnover (approximately 6,000 companies).
Large non-EU companies with over €450 million in net turnover in the EU (approximately 900 companies).
Despite only directly applying to large corporations, the European commission also notes that SMEs may be indirectly affected as business partners or in value chains of larger in scope companies. The Directive promises to provide support and protective measures for SMEs accordingly, in fact this played a pivotal part in getting the CS3D approved.
When does it apply?
Member states have two years to transpose the directive into law, and it will start to apply to companies from 2027 in phases depending on company size and turnover.
From 2027: companies with over 5,000 employees and €1,500 million turnover
From 2028: companies with over 3,000 employees and €900 million turnover
From 2029: companies with over 1,000 employees and €450 million turnover
What does it require?
CS3D requires companies to adopt Corporate Due Diligence procedures in alignment with OECD Due Diligence Guidance for Responsible Business Conduct, involving:
Integrating due diligence into policies and management systems,
Identifying and assessing adverse human rights and environmental impacts,
Preventing, ceasing or minimising actual and potential adverse human rights, and environmental impacts,
Assessing the effectiveness of measures,
Communicating,
Providing remediation.
CS3D requires that companies report how they implement due diligence publicly, either as part of a CSRD report if they fall within scope, or annually on the company website. Alongside corporate due diligence, CS3D also requires companies to set a climate transition plan to ensure their business models are in line with limiting global warming to 1.5°C.
What happens if you don’t comply in time?
Companies that do not comply risk financial penalties of up to 5% of their net global turnover, with the aim of ensuring victims of a company's adverse impacts receive compensation. It is up to each member state to decide and govern the civil liability of companies for damages resulting from non-compliance with the due diligence process.
What should you do now?
Review the legislation guidance to understand if you come under scope. Even if not you could proactively improve or establish your companies due diligence process by:
Alerting leadership of the incoming regulation and whether it impacts your business
Ensuring you are measuring your carbon emissions, have a net zero target set and a climate transition plan to reach that target.
Conducting a materiality assessment to understand your risk priorities.
Mapping and engaging your stakeholders.
Sustainability legislation is constantly evolving, which is great for the planet and society which we are all working hard to protect. However, this evolution does add to a sustainability professional's ever-growing task list. While we are not legal experts, we hope this guide provides the basics to keep you informed and offers resources to learn more. Subscribe to stay up-to-date with the next piece of climate legislation that may impact your business.
> Follow up with…
Know someone who would appreciate this CSDDD summary? Don’t keep us to yourself…
> Last week in consumer goods x climate…
The Good(s) News
Up and coming brands…
🎯 Cano Water announced that they are moving its operations to the UK from the Austrian Alps to limit its environmental impact. By relocating, the brand has successfully reduced its carbon footprint by over half and helps it to move closer to its goal of saving 1bn plastic bottles from landfill by 2030.
🎯 Bio Dima Ltd announced that they are the latest business to be supported by the East of England Regional Growth Loan Scheme. The £100k funding will help them prepare produce in their kitchen and help with business operations.
Bigger organisations…
⭐️ Morrisons announced that they are the first UK supermarket to offer in-store recycling for single-use coffee pods. Partnering with pod recycling service provider Podback, they are going to install recycling points at more than 350 stores, following a successful trial last year.
⭐ Diageo announced a paper-based bottle trial for their Baileys Irish Cream Liqueur product, by using dry moulded fibre. This project is in partnership with PA Consulting, as part of the Bottle Collective with PA and PulPac. The 2,000-bottle trial with consumers at the Time Out Group plc Festival in Spain.
⭐ ASDA announced that they will become the first retailer to have Welsh milk that is sourced, processed and packed in Wales on its shelves across 38 local stores. Collaborating with Arla dairy farmers and Pembrokeshire Creamery, this will help support local farmers and Pembrokeshire Creamery’s new state-of-the-art milk processing facility.
⭐ ALDI announced that they are rolling out 100% recycled plastic (rPet) packaging for some of its own-brand washing-up liquid bottles. This is expected to save over 500 tonnes of virgin plastic annually.
Industry wins…
⚡Ellen MacArthur Foundation announced a new initiative called 'The Fashion ReModel' at the Global Fashion Agenda Summit in Copenhagen. This initiative unites fashion industry frontrunners to make circular business models the norm. ARKET, COS, H&M, Primark, Reformation, Arc’teryx Equipment, Weekday and Zalando are among the first participants in the foundation-led demonstration project.
⚡Trivium Packaging announced their 2024 Buying Green Spotlight: Refill and Reuse, showing the significance of reusing packaging that has already been produced. The research found that 80% are interested in refillable packaging to achieve true circularity and reducing environmental impact.
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> In case you missed it
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We went Behind the Brand with Arthur Waley of Moving Mountains in last week’s edition of The Check-Out.
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Finally - last week we wrote about ‘5 partners to help you measure your biodiversity impact’ and learned about a bee-powered data gathering solution that we just can’t stop thinking about! Catch up on Newsletter #139 here.
That’s it for today!
Want more? Check out ‘The Check-Out’ this Thursday for the latest brands in our basket. In the meantime, if you miss us, reply to this email or reach out at info@followingthefootprints.com to say hi. We’re always on the hunt for contributors, cool brands, and climate memes.
Much love,
Team FTF