Brief Introduction to CSDDD and Requirements for SME Suppliers
The Corporate Sustainability Due Diligence Directive (CSDDD) is an EU regulation aimed at promoting sustainability and mitigating adverse environmental and human rights impacts throughout companies' operations and supply chains. It was approved by the EU on June 13, 2024, and officially entered into force on July 25, 2024. The CSDDD is designed to harmonize supply chain obligations across the EU and ensure that companies integrate sustainability due diligence into their business models.
Key Requirements for SME Suppliers
While SMEs are not directly subject to the CSDDD, they will be impacted as suppliers to larger companies that are within the scope of the directive. Here’s what SME suppliers need to do:
1. Understand the Obligations:
- SME suppliers need to understand that their larger customers are required to conduct due diligence on their supply chains to identify and mitigate adverse environmental and human rights impacts.
2. Collect and Share Information:
- SMEs will receive requests from their customers to collect and share information on actual or potential adverse impacts. This includes data on environmental and social issues relevant to their operations.
3. Support from Larger Companies:
- Companies within the scope of the CSDDD are required to provide targeted and proportionate support to their SME business partners. This support can include financial assistance and investments to help SMEs meet the necessary standards.
4. Engage with Customers:
- SMEs should maintain open communication with their customers to understand specific reporting needs and timelines. Engaging with customers can also help SMEs build capacity and improve their sustainability practices.
5. Use Simplified Reporting Tools:
- SMEs can leverage simplified reporting tools and questionnaires designed for smaller organizations. For example, CDP offers an SME questionnaire that helps SMEs understand where to focus their attention and build capacity for effective disclosure.
6. Prepare for Data Requests:
- SMEs should be prepared to provide data on their environmental and social impacts, as well as any measures they have taken to address these impacts. This data will be used by larger companies to fulfill their due diligence obligations under the CSDDD.
Practical Steps for SME Suppliers
- Assess Current Practices: Evaluate existing sustainability practices and identify areas for improvement.
- Implement Data Collection Systems: Set up systems to collect and manage the required data efficiently.
- Engage with Stakeholders: Work closely with customers and other stakeholders to understand their expectations and requirements.
- Seek Support and Resources: Utilize resources and support provided by larger companies and industry associations to enhance sustainability practices and reporting capabilities.
By taking these steps, SME suppliers can effectively support their larger customers in meeting the CSDDD requirements and contribute to a more sustainable business environment.
Related articles:
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How to Start ESG Work in Your Factory?
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Why Does Factory Need to Ensure Worker's Fundamental Rights at Work?
Why Does Factory Need to Have an Environmental Performance Management System?
How to Improve Energy Efficiency & Water Efficiency in Fabric Mills?
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