CSDDD (Corporate Sustainability Due Diligence Directive)

CSDDDis the European Union's initiative aimed at promoting sustainable and responsible business practices. This directive requires large companies to identify, prevent, mitigate and account for human rights and environmental impacts in their operations, subsidiaries and supply chains. The aim is to ensure that companies consider human rights and environmental issues in their operations.

LkSG (Lieferkettensensorgfaltspflichtengesetz)

Lieferkettensorgfaltspflichtengesetzis Germany's law to protect human rights and environmental standards in the supply chains of large companies. This law requires companies to fulfill their human rights and environmental responsibilities in their supply chains.

CSDDD and LkSG Comparison

Germany's Lieferkettensorgfaltspflichtengesetz (LkSG) applies to German companies with one thousand or more employees. This law sets out the human rights and environmental responsibilities of companies. It does not directly stipulate or impose civil legal liability. However, violations carry the threat of fines of up to %2 of global annual revenue.

The EU's Corporate Sustainability Due Diligence Directive (CSDDD) targets companies with 1,000 or more employees and global net annual revenues of more than €450 million. It requires companies to identify human rights and environmental risks in their supply chains and take measures to prevent and remediate them. This inclusive process is made possible by a climate plan. Responsibility is spread throughout the supply chain. This allows communication and interaction between companies to evolve positively. Plans include administrative control and deterrent fines. Fines of up to %5 of the company's net annual revenue will be of great benefit in terms of deterrence.

There are some differences between these two laws. These include the size of affected enterprises, concepts of liability, the distinction between direct and indirect suppliers, possible penalties and the role of stakeholders. In general, the CSDDD is stricter than the LkSG, especially on environmental impacts and climate change.

Companies should prepare for the implementation of the CSDDD as this law is likely to have more stringent requirements. Preparations should start with a comprehensive collection and assessment of supplier information. Close interaction with suppliers, continuous monitoring and adaptations are crucial parts of the process. For companies, ensuring that their suppliers comply with the requirements of the law will be a secondary responsibility. This requires holistic planning, including the implementation of all legal updates together with suppliers.

To successfully meet the challenges, it is essential for businesses to take a systematic approach. By collecting all the necessary data, it is important to set clear guidelines for the creation of reports. The support of external experts and the use of digital solutions is an essential element of the compliance process.

CSDDD Implementation Stages:

• 2026: First Phase

  Two years after the entry into force of the CSDDD, in 2026, companies are expected to take the first steps to comply with the law. At this stage, companies will need to understand the requirements of the CSDDD and identify appropriate strategies to meet these requirements. Identifying human rights abuses and environmental risks in their supply chains will also be part of the process. Companies will be required not only to identify but also to report all this data.

• 2027: Phase Two

  In the third year, 2027, the implementation of the CSDDD will be further expanded. At this stage, larger companies (those with more than 5,000 employees and annual revenues of over €1.5 billion) will be required to comply with the requirements of the CSDDD. Identifying and reporting on human rights violations and environmental risks in their supply chains will also be an essential task.

• 2028: Phase Three

  In the fourth year, 2028, the scope of the CSDDD will further expand. At this stage, smaller and medium-sized companies (those with more than 3,000 employees and annual revenues of over €900 million) will need to comply with the requirements of the CSDDD. These companies will also have to report human rights violations and environmental risks in their supply chains.

• 2029: Final Phase

  In 2029, the fifth and final year, the implementation of the CSDDD will be completed. At this stage, all in-scope companies (those with more than 1,000 employees and annual revenues of over €450 million) should be fully compliant with the requirements of the CSDDD. These companies are expected to run a full-fledged CSDDD compliance program to identify, prevent and take corrective measures to address human rights violations and environmental risks in their supply chains.

Conclusion:

The effects of laws like the EU's CSDDD and Germany's LkSG do not only affect companies in the EU or Germany. They also affect any company operating around the world that trades with these countries. These laws aim to increase sustainability standards in companies' supply chains.

Based on the above information, a company in Turkey will be covered by these laws if it has a business relationship with companies in the EU or Germany. For example, if a Turkish company is a supplier or subcontractor in the supply chain of an EU company, it will have to comply with the requirements of these regulations. Furthermore, if a Turkish company's products or services do not comply with EU or German regulations, it will face difficulties in accessing these markets.

Therefore, it is of great importance for companies in Turkey to monitor and comply with such international legal regulations. These compliance efforts will help them gain a competitive advantage in international trade and business relations. At the same time, we will continue our efforts link You can reach via