EU directive requiring large companies to conduct due diligence on human rights and environmental harm across their value chain, including a climate transition plan obligation.
The climate due diligence obligation, carried by the EU Corporate Sustainability Due Diligence Directive adopted in 2024, requires large companies to identify, prevent and address human rights and environmental harm caused by their own activities, those of their subsidiaries, and those of their business partners across the value chain. Its climate component further requires the adoption and effective implementation of a transition plan compatible with limiting warming to 1.5 degrees, a requirement that goes beyond disclosure to cover a company's actual conduct. For an insurer, this directive has a dual reach: it applies directly as a large company itself subject to due diligence over its own value chain, and it indirectly affects the risk analysis it carries out on its insured clients who are themselves subject to the obligation, whose due diligence failures can now trigger civil liability explicitly provided for in the text. The scope, initially broad, was narrowed during final negotiations to focus on very large companies, which for now limits the number of insurers directly in scope.
Adopted by the Council of the European Union in May 2024 after tense negotiations over its scope, the CSDDD requires the largest European companies, under a staggered timetable based on size, to adopt a climate transition plan and exposes them to civil liability for a clear failure of due diligence.
CSDDD, CS3D, devoir de vigilance européen, directive vigilance durable