Understanding the EU Directive on Corporate Sustainability Due Diligence and Examining Strategic Responses

Abstract

This paper examines in detail the Directive on Corporate Sustainability Due Diligence (CSDDD) to be implemented by Europe Union (EU) from 2024, and provides insights into response strategies and execution tasks. The EU plans to apply the CSDDD to all companies trading in the EU region while legislating the directive on sustainable supply chain management based on due diligence for human rights, environment, employment, etc. This implies the paradigm shift of emphasizing on supply chain transparency including legal binding and obligations, rather than voluntary corporate activities. Even though the Korean firms also need to thoroughly prepare for managerial ways to respond to the CSDDD, their response level is low and that of SMEs (Small and Medium-sized Enterprises) is even more insufficient. Thus, we suggest the guidelines combining ISO management system with the due diligence areas of the CSDDD, and propose strategic roadmap which can be used as a reference for preparing for the CSDDD.