‘Most firms won’t comply with EU due diligence law by 2030’: C-suite survey

Most respondents said their businesses didn’t understand how to apply CS3D

More than half of C-suite leaders in Europe think the majority of businesses will fall foul of the EU’s upcoming supply chain due diligence law for at least the rest of the decade.  

A survey of 1,200 executives by advisory firm DWF found that 57% believed most companies won’t comply fully with the Corporate Sustainability Due Diligence Directive (CS3D) by 2030.

The survey is based on the opinions of CEOs, CFOs and COOs, along with those in charge of staff, sustainability, compliance, ethics, risk and legal functions, from European companies with a minimum global turnover of €150m.

The sectors covered include consumer and retail, energy, insurance, private equity, real estate, and transport and logistics.

CS3D is due to go to a final vote at European Parliament next week, after months of setbacks and dilution. If it is adopted, it will force companies with large operations in the EU to take responsibility for mitigating environmental and social harms caused by their supply chains, and to create climate transition plans, among other things.

Under the current plans, the law will be be phased in from 2027 and firms could face fines of 5% of global turnover if they fail to comply.

But only 27% of respondents felt their organisations understood how to apply CS3D.

Around half of those surveyed said their business currently measured the negative impact its operations had on human rights. This fell to 32% when it came to assessing the impacts of direct suppliers.  

“Our report has exposed a knowledge-gap between C-suite leaders and regulatory expectations,” said Tracey Groves, DWF’s head of sustainable business. “To embrace greater accountability and drive meaningful change, regulators must provide a template for business to work from and a portal to access this information.”

The EU is currently developing a European Single Access Point, which will serve as a data lake for all sustainability information collected from companies under its numerous legislative initiatives, including the Corporate Sustainability Reporting Directive.