Standards on sustainable business confirmed as legally binding for large companies

The landmark Corporate Sustainability Due Diligence Directive entered into force on 25 July 2024 establishing legally binding standards for large companies to address their environmental and human rights impacts, both within the EU and globally. The Directive empowers authorities to sanction companies failing to meet their obligations - including fines of up to 5% of the companies’ global turnover.

The Directive applies to

• Large EU companies: > 1000 employees and > EUR 450 million turnover (net) worldwide.
• Large non-EU companies: > EUR 450 million turnover (net) in EU.

Companies are obligated to

• identify and assess adverse human rights and environmental impacts;
• prevent, mitigate and bring to an end or minimize such adverse impacts; and
• adopt and put into effect a transition plan for climate change mitigation which aims to ensure compatibility of the company’s business model and strategy with limiting global warming to 1.5 °C in line with the Paris Agreement.

Finland has until 26 July 2026 to transpose the Directive into its national law. The largest in-scope companies should be ready to comply with the Directive a year later in July 2027, while full application will commence three years later in July 2029.

For more information, please contact Anders Floman and Saara Sorvaniemi.