Implementation of Corporate Sustainability Due Diligence Directive requires national preparation in Finland

The EU’s Competitiveness Council, which includes ministers from the Member States, adopted the Corporate Sustainability Due Diligence Directive (CSDD Directive) on 24 May. After formal approval by the Council, the Directive will be signed and published in the Official Journal of the European Union. After the Directive has entered into force, the Member States will have two years to transpose the new rules into their national legislation.

The implementation of the CSDD Directive requires new national legislation in Finland. The legislation will be prepared under the leadership of the Ministry of Economic Affairs and Employment in cooperation with various other ministries and interest groups. 

Under the due diligence duty laid down in the Directive, companies will be obligated to identify, prevent, end or mitigate adverse impacts of their activities on human rights and the environment. The obligations will also apply to companies’ supply chains and subsidiaries. In addition, certain large companies will be required to draw up a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C in line with the Paris Agreement. 

Due diligence obligations will first apply to largest companies

The legislation will be implemented in three stages within five years. The implementation will begin with the largest companies. After three years of the entry into force of the Directive, the due diligence obligations will apply to companies with 5,000 employees and a turnover of EUR 1,500 million and after four years to companies with 3,000 employees and a turnover of EUR 900 million. After five years, the obligations will apply to companies with 1,000 employees and a turnover of EUR 450 million.

The legislation will significantly increase the liabilities and obligations of large companies to mitigate any possible adverse impacts of their own operations and those of their subsidiaries and business partners.

The European Union has prepared the CSDD Directive for a long time. The European Commission published its proposal for the Directive on 23 February 2022.

Inquiries:

Laura Pätsi, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 276
Sami Teräväinen, Senior Officer, Legal Affairs, Ministry of Economic Affairs and Employment, tel. +358 295 060 088