Clifford Chance

The draft bill for the Dutch law implementation of the Corporate Sustainability Due Diligence Directive ("CSDDD"), referred to as the "International Responsible Business Conduct Act" (Wet internationaal verantwoord ondernemen, or Wivo) has now been published along with an explanatory memorandum. The consultation process is now open with a deadline of 29 December 2024 for any response.

The draft bill and explanatory memorandum may be revised based on advice from the Dutch Council of State and input from stakeholders during the consultation. While only the final Bill itself will be legally binding under Dutch law, the explanatory memorandum may also be highly authoritative subject to it conforming with the objectives of the EU Directive.

As a recap, the CSDDD requires large EU companies and non-EU companies with significant turnover in the EU to undertake mandatory human rights and environmental due diligence ("HREDD"). This risk-based due diligence must identify and address actual and potential adverse human rights and environmental impacts for in-scope companies' own operations, those of their subsidiaries and those of their business partners within their chains of activities.

In addition to HREDD, under Article 22 CSDDD in-scope companies both in and outside the EU will be required to adopt and put into effect a transition plan for climate change mitigation compatible with the Paris Agreement and EU climate objectives. 

The CSDDD was published in the Official Journal on 5 July 2024, and EU Member States will have until 26 July 2026 to adopt and publish the laws, regulations and administrative provisions necessary to comply with the Directive. Clifford Chance has examined the CSDDD and its implications for companies in its blog here.

No gold-plating of requirements in the Dutch draft bill

The draft Bill does not gold-plate (i.e. strengthen) any provisions of the CSDDD beyond what is necessary for minimum implementation. While it comes as no surprise that the Dutch draft bill mostly aligns with the requirements of the CSDDD, some provisions (and, notably, commentary within the explanatory memorandum) provide further insight into how the Bill will be implemented within the broader Dutch law framework, and where discretion is left for further ministerial action. 

• The Netherlands Authority for Consumers and Markets (ACM) has been designated as the relevant supervisory authority. The ACM's powers of supervision and enforcement extend across the draft Bill's due diligence obligations and the climate transition plan provisions, save that, as currently drafted, the ACM will not monitor the obligation to put the climate transition plan into effect. As Article 25(1) CSDDD states that "Member States shall require the supervisory authorities to supervise the adoption and design of the transition plan for climate change mitigation", the Dutch legislator is therefore electing to implement the obligations of the CSDDD to the minimum degree in this instance.
• In relation to the climate transition plan requirements, there is some apparent inconsistency between the draft explanatory memorandum and the draft Bill, notably as to whether absolute emission reduction targets are required. As per Article 22(1)(a) CSDDD, absolute reduction targets for Scope 1, 2 and 3 are only required "where appropriate". Careful consideration of the final drafting of the Bill will be important, including where an entity is already reporting a climate transition plan under CSRD.
• There is discretion to provide further clarification and stipulations (including in relation to the climate transition plan), however the extent of such action may be limited in line with the apparent guidance for implementing CSDDD to the minimum extent needed.
• In relation to Civil Liability, the Dutch draft does not contain any additional civil liability mechanisms to implement Article 29 CSDDD, in addition to/on top of the general rules on civil liability as laid down in the Dutch Civil Code in Book 3 and Book 6 (where the rules on tort law (article 6:162 DCC) and the rules on court orders (article 3:296 DCC) are codified) and the Dutch Code of Civil Procedure, save for some minor exceptions. For the remainder of the CSDDD civil liability provisions, the Dutch legislator is of the opinion that Article 29 is covered by the existing Dutch Civil Code. For example, the Implementing Bill does not contain provisions regarding access/standing for NGOs on the basis that Dutch law prescribes this already. 

Next steps

Following the end of the consultation phase, the draft bill and explanatory memorandum may be revised as mentioned above. Final implementation of the CSDDD into Dutch law is expected to take place by 26 July 2026, the deadline for all Member States. However, it remains to be seen whether other Member States will meet this deadline given the current delays with CSRD implementation.

Previous Clifford Chance publications on the CS3D:

• Blog: The EU's Corporate Sustainability Due Diligence Directive: Impact on U.S. Companies (October 2024)
• Blog: The EU's Corporate Sustainability Due Diligence Directive finally passes into law (May 2024)
• Briefing: Agreement reached on the EU Corporate Sustainability Due Diligence Directive – what financial services firms need to know (March 2024)
• Blog: The Corporate Sustainability Due Diligence Directive takes final shape (March 2024)
• Blog: Corporate Sustainability Due Diligence Directive provisionally agreed by the EU Council and Parliament (December 2023)
• Briefing: One Step Closer: U.S. Companies Active In Europe Will Need To Track Potential New Due Diligence Requirements As New Questions Arise (June 2023)
• Blog: European Parliament adopts its position on the Corporate Sustainability Due Diligence Directive (CS3D) (June 2023)
• Blog: European Parliament moves closer to a negotiating position on the proposed Corporate Sustainability Due Diligence Directive (May 2023)
• Blog: Council of the EU adopts negotiating position on the proposed Corporate Sustainability Due Diligence Directive (January 2023)
• Briefing: The European Commission Proposes Mandatory Human Rights and Environmental Due Diligence (May 2022)