LinkedIn Post for Vrai Limited

Today, I touch upon how the Corporate Sustainability Due Diligence Directive ("CS3D") will affect businesses that are not within its "direct" scope.

In-scope businesses have a legal obligation under the Directive to adopt and implement effective due diligence policies for identifying, preventing, mitigating, and ending human rights and environmental harms.

These requirements extend to:

1. An in-scope company's own activities;
2. The activities of a company it controls (e.g., a subsidiary);
3. The activities of direct and indirect business partners in its “chain of activities”.

A “chain of activities” includes activities in an upstream and downstream value chain; a reference to a sometimes lengthy and complex supply chain that exists in any sector or industry.

The upstream value chain includes suppliers who specialise in extracting, transporting, and storing raw materials, product design, and manufacturing. For example, if your company extracts, processes, or produces raw materials for a company that is in-scope, then you are part of the upstream “chain of activities” or if you handle the distribution or onward storage of an in-scope company’s products, or you deal with disposal of its products (including dismantling, recycling, or landfilling) you will be part of downstream “chain of activities”. I like to think of it as the "before" and "after" product/ service process.

The CS3D will have a cascading effect on global supply chains because of the wide reach of the term “chain of activities”.

On 29 February 2024, I’ll be hosting the first lecture of my VRAI 2024 Lecture Series on the Evolving ESG Legal Landscape, and the CS3D in particular, which is destined for other venues throughout Ireland and England soon.

Make sure you reserve your place in advance via Eventbrite (in the comments) or by emailing lawyers@vrai-ltd.co.uk.

Discounts are available if you book the entire series of six!