On April 24, Europe took a significant step towards corporate sustainability with the adoption of the Corporate Sustainability Due Diligence Directive (CSDDD).
This legislation marks an important milestone in the continent’s commitment to environmental protection and human rights, and presents a key opportunity for companies in the real estate sector to strengthen their responsible business practices.
Which companies will be affected by CSDDD?
The implementation of the CSDDD will have a differentiated impact on different types of companies, both inside and outside the European Union: European Union companies: the CSDDD will gradually apply mainly to large companies with more than 1,000 employees and an annual turnover of more than 450 million euros.
- 2027: companies with 5,000 employees and a turnover of at least 1.5 billion euros.
- 2028: companies with 3,000 employees and 900 million euros.
- 2029: companies with 1,000 employees and 450 million euros
Third country companies with activities in the EU: the CSDDD will refer only to their turnover.
- 2027: will apply to those with a turnover of at least 1.5 billion euros.
- 2028: will apply to those with a turnover of at least 900 million euros.
- 2029: will apply to those with a turnover of at least 450 million euros.
Small and medium-sized enterprises (SMEs): although SMEs are not directly included in the CSDDD proposal, they will be indirectly affected as part of the supply chain.
Large companies subject to the directive will require their suppliers and business partners to meet the same sustainability standards, which could lead to significant changes in the business practices of SMEs.
Obligations and requirements
Companies affected by the CSDDD shall:
1. develop a due diligence policy that addresses human rights and environmental impacts.
2. Conduct periodic assessments of their operations and supply chains to identify and prevent potential negative impacts.
3. Establish grievance procedures to address potential grievances related to their operations.
4. Adapt climate transition plans in line with the objectives of the Paris Agreement.
Implications of the CSDDD for the real estate sector
The real estate sector plays a crucial role in the economy and sustainable development, and the CSDDD will have a significant impact on companies in this sector.
Real estate companies, from developers to asset managers, will have to comply with the obligations set out in the directive, including the identification and mitigation of adverse human rights and environmental impacts, as well as the development of climate plans.
Impact on the supply chain
The CSDDD will also affect the real estate supply chain, as companies will need to ensure that their suppliers and business partners meet the same sustainability standards.
This will require greater transparency and oversight at all stages of the supply chain, from construction to waste management.
Preparing for compliance
To comply with CSDDD obligations, real estate companies can take a number of steps.
First, they can implement sustainability policies that address environmental and social challenges.
Then, conducting environmental and social impact assessments will allow them to identify areas for improvement and mitigate potential negative effects.
In addition, participating in certification and auditing programs will provide external validation of their sustainability efforts.
These companies can take advantage of tools and resources offered by real estate sustainability consulting firms to guide them in this process.
Moving towards sustainability with CSDDD
The Corporate Sustainability Due Diligence Directive represents an opportunity for companies in the real estate sector to demonstrate their commitment to sustainability and corporate responsibility.
With the right support and implementation of best practices, the real estate sector can lead the way to a more sustainable and equitable future for all.
Although the CSDDD is a recent piece of legislation, there are already real estate companies that are making strides in sustainability.
From implementing green technologies in buildings to promoting inclusive and accessible communities, there are many ways that companies in the sector can contribute to a more sustainable future.
