The European Union (EU) is leading globally on mandating corporate reporting of social and environmental supply chain impacts. Recently, two significant mandates were formally adopted by the EU: the Corporate Sustainability Due Diligence Directive (CSDDD) and the Packaging and Packaging Waste Regulation (PPWR). These laws will have a significant impact on EU-based businesses and their supply chains. In the EU, a directive establishes a goal and requires member states to transpose the goal into national law, whereas a regulation is immediately enforceable and legally binding across the EU.

The EU CSDDD aligns with two international standard frameworks: the UN Guiding Principles on Business and Human Rights (“UN Guiding Principles,”) and the OECD Guidelines for Multinational Enterprises.

EU CSDDD requires companies to conduct risk-based due diligence across their operations and supply chains. This includes disclosing the known impacts, potential impacts, and specific mitigation efforts focused on human rights abuses, environmental degradation, and climate. Notably, the legislation introduces financial penalties for non-compliance and requires "meaningful" stakeholder engagement.

The Human Rights Focus of the CSDDD

The landmark CSDDD represents a significant expansion in how companies will be held accountable for protecting human rights and preventing environmental impacts across their global operations. Here's what you need to know:

Applies to Large Companies: The CSDDD applies to EU companies with over 250 employees and a turnover exceeding €300 million, and non-EU companies with a turnover exceeding €400 million within the EU.
Focuses on Human Rights and Environment Impacts: Companies must identify, prevent, mitigate, and account for potential human rights and environmental abuses within their own operations and supply chains.
Increases Transparency Measures and Enforcement Penalties: Companies will be required to report on their due diligence measures and could face potential penalties for non-compliance.

This legislation presents both challenges and opportunities. Businesses will need to invest in robust due diligence processes to ensure their operations align with human rights standards. However, proactive companies can leverage the CSDDD to build stronger relationships with stakeholders and demonstrate their commitment to ethical sourcing.

What Does This Mean For Your Business?

The CSDDD will have a significant impact on businesses with operations in the EU or those with EU-based suppliers. Here's what you need to be aware of:

Mandatory Due Diligence: You will be required to conduct risk-based due diligence across your entire supply chain, identifying potential human rights violations, environmental impacts, and other sustainability issues.
Civil Liability: The legislation introduces civil liability, making companies potentially liable for harm caused by their supply chain activities.
Stakeholder Engagement: You will be obligated to engage with stakeholders, including workers, communities, and human rights defenders, throughout the due diligence process.
Transparency: Prepare to develop detailed disclosures about your company’s supply chain practices and define the actions you are taking to address risks.

Failure to comply with the CSDDD could result in significant consequences, including fines of up to 5% of a company's global annual net turnover.

Additionally, the legislation creates a pathway for civil liability lawsuits from those harmed by non-compliant business practices.

The Packaging Revolution: The PPWR

The EU has revised and strengthened the Packaging and Packaging Waste Regulation (PPWR) originally enacted in 1994. This regulation requires businesses to reduce packaging waste, and protect resources, in order to accelerate the EU's transition to a circular economy. The updated requirements include new targets for recyclability, recycled content, green claims, and on-label disposal instructions. Key changes include:

Ambitious Waste Reduction Targets: The commission defines a new recyclability grading system from Grade A (95% recyclable) through E, and established that all packaging must be mostly recyclable (at least 70%) by 2030.
Increased Recycled Content Requirements: Minimum recycled content is required for plastic packaging, with 10-35% required by 2030 and 50-65% required by 2040.
Green Claims and User Communications: Green claims are only acceptable if the packaging goes beyond the minimum PPWR requirements, and reusable packaging must be labeled with a QR code that provides instructions for re-use.

Limits on Certain Packaging: By 2030, most single-use plastic packaging will be banned, e.g., travel-sized hotel shampoo bottles and plastic condiments.

Deposit and Return Systems: Every EU member country must implement deposit and return systems for plastic and metal beverage containers by January 1, 2029.

Increased Recycling Rates: EU member countries will have national targets for recycling packaging waste.

The PPWR presents an opportunity for businesses to innovate and adapt their packaging strategies. Investing in sustainable packaging solutions will not only comply with regulations but also resonate with environmentally conscious consumers.

Taking Action

The CSDDD and PPWR represent a paradigm shift for businesses operating in the EU. Here are some steps you can take to ensure compliance and capitalize on these evolving regulations:

CSDDD:

CSDDD Readiness Assessment: Understand the actions your company has to take and when you have to comply. Then, conduct a gap analysis to determine what you already have in place, where you have gaps, and how to close those gaps ahead of the deadline.

Map Your Supply Chain: Gain a complete understanding and a full picture of your suppliers across your value chain.

Conduct a Human Rights Assessment: Take the first step in human rights due diligence by identifying and assessing the actual and potential adverse human rights impacts of your company’s operations.

Establish Your Climate Transition Plan: Develop your plan to reduce your company’s emissions and achieve 5-year targets through 2050, in line with both CSDDD and CSRD requirements.

PPWR:

Packaging Producers: Review your materials and processes to ensure packaging is recyclable and meets minimum recycled content requirements.

Companies that Procure Packaging: Explore recyclable packaging options and work with packaging suppliers to understand their capabilities in providing materials that meet the updated law.

All Stakeholders: Stay informed about the final details of the regulation and prepare for potential changes in material sourcing, packaging design, and waste management practices.

CSDDD & PPWR:

Seek Expert Guidance: Partner with sustainability consultants like Uplift Agency to navigate the complexities of these regulations and develop effective compliance strategies.

By proactively addressing the CSDDD and PPWR, your business can not only ensure compliance but also become a leader in responsible sourcing and sustainable packaging practices.

Uplift Can Help

Uplift Agency offers a range of services to help businesses navigate the evolving regulatory landscape. Uplift’s experts can help you prepare for all aspects of compliance with CSDDD.

We understand that the regulatory landscape is complex and ever-changing which is why we work to ensure that our services satisfy new and upcoming regulations. We help you integrate strong environmental practices, respect for human rights, and positive social impact into your core business strategy.

Learn more about our sustainability and social impact serviceshere.

Navigating the New Landscape: How the EU's Adoption of CSDDD and PPWR Law Impact Your Business

The Human Rights Focus of the CSDDD

What Does This Mean For Your Business?

The Packaging Revolution: The PPWR