The directive marks an additional and complementary step to the reporting obligation imposed by the CSRD (Corporate Responsibility Reporting Directive). Companies will no longer simply have to report their extra-financial performance, but must also take into account their social and environmental impact, in line with international standards on human rights and environmental protection. They will have to integrate duty of care into their business policies and strategies, invest in the protection of human rights and the environment, and work with their business partners to ensure compliance.
Scope of application :
European member states will have two years to transpose the directive into national law. It will be rolled out from 2027 for companies with over 5,000 employees and global sales of over €1.5 billion. From 2028, companies with more than 3,000 employees and worldwide sales of over 900 million euros will be required to report their extra-financial performance. From 2029 onwards, this will apply to companies with over 1,000 employees and global sales in excess of €450 million. The directive also applies to non-European companies meeting the same thresholds in the EU.
Penalties :
The directive emphasizes companies’ liability in the event of non-compliance with their obligations, obliging them to compensate victims in full. A supervisory authority will be created, charged with investigating potential violations and imposing sanctions on companies that fail to meet their obligations. These sanctions can include fines of up to 5% of the company’s worldwide net sales.
Procurement departments and Artificial Intelligence :
Procurement departments will be in the front line to ensure this duty of care with the supplier ecosystem. AI will then be able to demonstrate its full power and usefulness for tasks that will no longer be manageable with the XL tool alone, as has been attempted, with great difficulty and limited results, in recent years.
The directive marks an additional and complementary step to the reporting obligation imposed by the CSRD (Corporate Responsibility Reporting Directive). Companies will no longer simply have to report their extra-financial performance, but must also take into account their social and environmental impact, in line with international standards on human rights and environmental protection. They will have to integrate duty of care into their business policies and strategies, invest in the protection of human rights and the environment, and work with their business partners to ensure compliance.
Scope of application :
European member states will have two years to transpose the directive into national law. It will be rolled out from 2027 for companies with over 5,000 employees and global sales of over €1.5 billion. From 2028, companies with more than 3,000 employees and worldwide sales of over 900 million euros will be required to report their extra-financial performance. From 2029 onwards, this will apply to companies with over 1,000 employees and global sales in excess of €450 million. The directive also applies to non-European companies meeting the same thresholds in the EU.
Penalties :
The directive emphasizes companies’ liability in the event of non-compliance with their obligations, obliging them to compensate victims in full. A supervisory authority will be created, charged with investigating potential violations and imposing sanctions on companies that fail to meet their obligations. These sanctions can include fines of up to 5% of the company’s worldwide net sales.
Procurement departments and Artificial Intelligence :
Procurement departments will be in the front line to ensure this duty of care with the supplier ecosystem. AI will then be able to demonstrate its full power and usefulness for tasks that will no longer be manageable with the XL tool alone, as has been attempted, with great difficulty and limited results, in recent years.
Overcoming the Unexpected, Shaping the Future: Building Resilience through Procurement
RGN Advisory
Embedding ESG and AI into Procurement