On 18 November, the Dutch Ministry of Foreign Affairs published a consultation on a draft bill to transpose the EU CSDDD. The proposal is largely in line with minimum requirements under the Act and does not introduce more stringent measures. This is an early draft, and we can expect some changes after the consultation period.
- On 18 November, the Dutch Ministry of Foreign Affairs published a consultation on a draft bill titled International Responsibility Act to transpose the EU Corporate Sustainability Due Diligence Directive (CSDDD). This is the first EU member state to have published a draft bill, and it appears to be far ahead of other member states in the transposition process. The draft bill is available in Dutch, and this Alert is based on an unofficial translation. The consultation period is open until 29 December 2024, and respondents can choose whether or not their responses are made public.
- The proposal would repeal the Child Labour Due Diligence Law which was adopted in 2019, but has not entered into force to date.
- The CSDDD came into force on 25 July, and member states have until 26 July 2026 to transpose the legislation into national law. It will then begin applying to the first tranche of companies the following year, on 26 July 2027.
- Under EU law, directives must be transposed into national law, meaning that EU member states are required to pass national legislation, which meets the minimum requirements set in the directive. There are however several areas where member states can supplement the CSDDD and impose additional measures. As a result, we can expect some discrepancy between national laws, and it is important that companies review the content of national laws.
- The key elements of the Dutch proposal appear to largely align with the minimum thresholds under the CSDDD and do not apply additional requirements on companies.
- Effective date is aligned – the proposal foresees the act taking effect on 26 July 2026, which is the date foreseen in the CSDDD. Despite the advanced drafting process, the bill would not begin applying earlier than required under the CSDDD
- The company scope is aligned – the proposal applies to European or foreign companies with more than 1000 employees and turnover of more than 450 million euros. Member States have the option to broaden the scope of companies.
- Timeline for enforcement is aligned – the proposal would begin applying to the first group of companies with more than 5000 employees by 26 July 2027, followed by companies with more than 3000 employees by 26 July 2028, followed by companies with more than 1000 employees by 26 July 2029.
- Due diligence requirements are aligned – the proposal largely mirrors the language in the CSDDD with respect to the steps of the due diligence process and the requirements on Climate Change Transition Plans.
- Multi-stakeholder initiatives (MSIs) are aligned – the proposal permits companies to collaborate on and share resources under certain conditions through MSIs. This is foreseen under the CSDDD. The Commission is expected to issue criteria and guidance to help companies assess the fitness of MSIs.
- Penalties are aligned – Companies are subject to a maximum penalty of 5% of consolidated worldwide turnover in the previous financial year for non-compliance. This is in line with the minimum thresholds under the CSDDD.
- Civil liability is aligned – The CSDDD largely leaves member states to determine the scope of civil liability. The proposal refers to Dutch tort law, and does not introduce new rules, but refers to the existing framework. Claimants have five years to bring a claim, in line with the minimum thresholds under the CSDDD.
- The Dutch proposal identifies the Consumer and Market Authority as the national supervisory authority responsible for supervising compliance with the due diligence and climate change obligations under the Directive.