Do you know your CSDDD from your CSRD? Relax, it’s all good

The EU’s Corporate Sustainability Reporting Directive (CSRD) heralded a rise in the number of companies required to report in more detail on economic, social and governance issues of sustainability. Now, writes IOSH policy specialist Dr Ivan Williams Jimenez, we welcome the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), an opportunity for organisations and professionals to catch up on their due diligence concerning the human rights and environment aspects of sustainability.

The European Commission, through its recently proposed Corporate Sustainability Due Diligence Directive (CSDDD), has presented a legislative framework that obliges companies to become more proactive in evidencing what actions they are taking to protect the environment and human rights.

While the Directive constitutes a provisional political agreement (with the final text expected to be finalised in the first quarter of 2024), the CSDDD will require many companies in the EU and beyond to conduct environmental and human rights due diligence on their global operations and value chain. This will include having to adopt a transition plan for climate change mitigation.

Put simply, due diligence describes the actions taken by a company to identify and act on actual and potential risks to people and to the environment. This covers not just its own operations but the entire supply chain.

In practice, due diligence can be used as a tool that makes the less visible risks visible, and provides a structured approach to help identify, report on and mitigate these risks. In this context, due diligence considerations are intrinsically connected to business risk management – but they start with an understanding of what the risks to people and to the environment might be. This is something OSH professionals are familiar with - they not only understand the principles of risk management but they conduct and analyse risk assessments. Many of them will also go deeper by identifying and treating organisational risks. Organisational risk management covers strategies to mitigate reputational, environmental and financial risk, to recognising and managing risks to the workforce ( risk of accidents, injuries, or illness), clients, the supply chain and the community.

Sustainability

This is critical for all companies and their sustainable business practices. They could, at any moment, be the cause of adverse impacts on people and/or the planet through their operations and their value chains. Last autumn, we reported on the EU’s Corporate Sustainability Reporting Directive (CSRD), which is connected to the CSDDD, both pieces of legislation being designed to be crosscutting. In short, the CSRD looks to set the standard for sustainability-related reporting whilst also increasing the transparency and disclosure of corporate reporting. Similarly, the CSDDD will require companies to create internal systems that improve the sustainability performance of their organisation – including a company’s upstream and downstream activities - by establishing a mechanism to identify and mitigate potential environmental and human rights impacts associated with a company’s activities and operations.

Given the CSDDD’s relevance for companies’ due diligence obligations on environmental and human rights matters (including child labour, modern slavery and occupational safety and health [OSH] violations), now could be a good moment to advise on how to prepare for the CSDDD.

The Directive will detail companies’ compliance requirements, including more effective integration of due diligence into policies and risk management systems for the identification, assessment, prevention, mitigation and remediation of adverse impacts on human rights and the environment. It will also place a strong emphasis on making a climate change transition plan available.

The chief challenge ahead will be making sure OSH professionals with an interest in this subject get to play a central role on this journey towards greater levels of compliance on sustainability reporting. This will help make clearer the connection between OSH and an organisation’s long-term sustainability.

Your key OSH action points

Finally, here are some action points I recommend for OSH professionals become better considered when it comes to corporate reporting practices and processes:

• First of all, familiarise yourself with sustainability reporting and corporate due diligence within the context and operations of your organisation
• Engage with professionals within your business that might cover different aspects of human rights due diligence and environmental business practices so that you gain more information of the systems that are in place to better identify these issues
• Review the role that leaders within your organisation play when it comes to the sustainability ownership agenda
• Review and identify any existing business practices that could be improved to help demonstrate good due diligence and establish ways in which OSH can help to enhance or establish a due diligence policy
• Assess, identify, and evaluate risks (including those involving suppliers), and implement sustainability-related mitigation strategies
• Bring your expertise to activities where good OSH can help the organisation become more sustainable and responsible in the longer term
• Improve your skills and knowledge in this field, based on IOSH’s Blueprint areas for development, such as sustainability, stakeholder management and risk management or through IOSH’s Leading Sustainably programme, that show how OSH can help build and maintain a more sustainable business
• Delve into IOSH’s report ‘Delivering a sustainable future’, which maps the key elements of OSH management with targets underpinning the United Nations Sustainable Development Goals (SDGs)
• Get involved with IOSH’s Catch the Wave campaign on social sustainability by signing the campaign, visiting the website, downloading the free materials or promoting your organisation’s efforts to get OSH recognised and represented on the sustainability agenda by providing a case study.