Environmental, Social and Governance | UK Regulatory Outlook June 2023

Deforestation regulation published in the Official Journal of EU

The European Union's deforestation regulation was published in the Official Journal on 9 June. This means that obligations will arise from December 2024. For more on the new rules, please see our earlier Regulatory Outlook.

European Parliament adopts its position on Corporate Sustainability Due Diligence Directive

On 1 June, the European Parliament adopted its position on the Corporate Sustainability Due Diligence Directive (CSDD), meaning informal trialogue negotiations can now begin to reach an agreement on the final text.

The Parliament's adopted text has expanded the scope of the new rules which will apply to EU-based companies, regardless of their sector, including financial services, with more than 250 employees and a worldwide turnover over €40 million as well as to parent companies with over 500 employees and a worldwide turnover of more than €150 million.

Non-EU companies with a turnover higher than €150 million, if at least €40 million was generated in the EU, will also be included.

As noted in our previous Regulatory Outlook, the European Parliament's position also provides for fines of at least 5% of net worldwide turnover for non-compliance and bans on non-compliant third-country companies from public procurement.

Once the CSDD enters into force, obligations will arise via a phased-in approach three or four years from this date, depending on a company's size.