Supplying to Europe After 2027: Are Indian Businesses Ready for the EU’s CSDDD?

Imagine being a textile manufacturer, or selling garments, footwear. Imagine dealing in a range of food and agriculture items like tea, coffee, rice, etc. to mining materials, metals, steel, aluminium, and engineering components.

If you were supplying your products to the European markets, your European partners will start asking you questions regarding the attitude of your enterprise towards your workers, the impact that your employed process of producing your goods has on the environment, and whether you as a company make sure to adhere to some ethical practices in the global supply chain.

What is CSDDD?

This is the EU’s Corporate Sustainable Due Diligence Directive or CSDDD, which acts as a rulebook making the playground a little equitable to the often-neglected elements in the society, curbing on the malpractices and loose ends often ignored by the big firms afflicting the society majorly.

Taking in consideration the Europe 2050 climate neutrality objective of the Paris agreement and the European Climate Law, the directive aims at introducing sustainable practices in the global supply chain.

Who does it apply to?

Although the rule directly applies to large EU companies with more than 1000 employees and 450 million Euros in a financial year, it might also include your companies under the section of the non-EU companies but only if the net turnover solely in EU exceeds over 450 million Euros.

However, even if you don’t fall under the list of the non-EU companies, you might still face the impact of this directive if you are supplying your products to the European markets, as the European companies under the directive will depend on you to follow the directives issued by the EU in order to continue doing business with you.

What does the directive demand?

They demand three simple things from you

• Protect Human rights by using methods like fair wages, ensuring safe and equitable working conditions for everyone

• Protect the environment by curbing the pollution, manage waste production and disposal.

• Align your goals with the climate goals like the net-zero target of 2050.

  
  

The plan starts from 2027 under the current Omnibus proposal, which gives Indian companies time to prepare.

What can Indian Companies do?

What Indian companies can do is

• First of all, check if you have a turnover in EU enough to fulfil the criteria of the CSDDD.

• Even if you don’t, assess your current practices, tracing through the whole of your supply chain, from the raw materials to the end product.

• This assessment should be followed by finding and taking suitable measures to resolve the gaps. Some suggestions can be installing a grievance mechanism, work on the safety standards of the workplace, document each and every improvement made.

• The final step is certification for credibility. This can be complemented with annual reports that attracts the EU partners and investments even more.

  
  

Yes, while it demands investment, complying to these rules will open doors to the European markets, improve your standard of credibility and attracts new businesses investments and partnerships with the top European companies, which will help the Indian market rise helping it reach new heights.

Non-compliance on other had can lead to losing contracts, fines and even a damaged reputation. The current buffer gives us a time to decide whether we want to adapt the current situation and grow, or risk being left out.

This article is written by

Bhaskar Jha, EICBI Public Policy and International Affairs Intern