“This is happening”: Incoming Commissioner stands firm on EU’s corporate due diligence rules

McGrath told MEPs there was no need to delay or revise CS3D, but companies need more support

The Commissioner expected to be responsible for the next phase of the EU Corporate Sustainability Due Diligence Directive (CS3D) stood firm on the law’s timeline and scope during questioning today.

Michael McGrath, who is set to take charge of justice, consumer protection and the rule of law at the European Commission, was quizzed by MEPs ahead of a Parliamentary vote on whether he gets the role.

On CS3D, Bulgarian MEP Emil Radev asked McGrath if he would “consider a grace period or postponing its implementation if it proves that such implementation comes across massive hurdles?”

Radev noted that, in written answers sent to Parliament before the hearing, McGrath had come out in support of the Commission’s goal to cut reporting obligations by at least 25% and had acknowledged the need to reduce the regulatory burdens companies were facing.

McGrath responded by saying his “priority” will be to “ensure timely and effective implementation” of CS3D.

He added later in the hearing that “there should not be any reason for delay”.

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He also said “those who are critical or sceptical of this proposal” should note CS3D doesn’t introduce new reporting requirements – it uses information disclosed under the Corporate Sustainability Reporting Directive – and suggested it was therefore not relevant to the 25% reduction plan.

CS3D seeks to hold large companies in Europe accountable for any serious harm they do to the environment and human rights through their business activities, including their supply chains.

It will be introduced in phases between July 2027 and July 2029.

“We need to pay particular attention to the relevant support measures that will be needed as part of the implementation phase, and we need to make it as easy as possible for companies to comply with the Directive,” McGrath told Radev.  

The Commission plans to produce a raft of guidance to support firms, including advice on how they should undertake due diligence, risk assessments, climate transition plans and stakeholder engagement under CS3D.

It will also offer up examples of contract clauses that support compliance with the law and set up a ‘help desk’ to give dedicated advice to entities covered by the rules.

“It’s important that we provide the legal certainty that’s needed,” said McGrath.

“Many large companies are already having to comply with equivalent national laws that might not be of the same depth or standard,” he observed, referring to due diligence rules in countries including France and Germany.

“So I think it’s important we give them the certainty that this is going to happen. The legislators have concluded their work, and now the focus has to be on the implementation of it as quickly as possible.”