EU CSDDD: Dos and Don'ts in Business Contract
Mastering CSDDDD-Aligned Contracting: Key Dos and Don'ts for seamless negotiation and compliance. Unlock efficiency and avoid common pitfalls!
Dos:
Design contracts that share the responsibility for due diligence.
Jointly commit to cooperate to address adverse impacts in an ongoing, risk-based, and dynamic fashion as this incentivizes more trust and transparency between the parties.
Commit to responsible purchasing practices from day one as these can help prevent or mitigate adverse impacts. Where possible, commit the seller to do the same with its sellers.
Commit to fair commercial terms that can support effective HRDD.
Ensure that due diligence obligations and related costs are fairly distributed in the contract, based on the companies' respective capacities and resources. Especially for SMEs, ensure that business partners have the capacities and support they need to meet HRDD requirements.
Jointly commit to prioritizing remediation or mitigation of adverse impacts and address them in a measured way that considers the context in which they arise.
Commit to responsibly exiting the contract by giving reasonable notice to the counterparty and ensuring that any existing and adverse adverse impacts caused by termination are addressed.
Don’ts:
Use contracts simply to transfer due diligence responsibilities to business partners.
Use contracts to establish one-sided (supplier-only) obligations and strict liability approaches that treat any imperfection as a breach, which incentivizes partners to hide problems.
Ignore the role of companies' purchasing practices as these can contribute to (jointly cause) adverse impacts.
Use contracts to formalize unfair commercial terms that can aggravate adverse impacts.
Overwhelm suppliers with unreasonable due diligence expectations, including expectations that they lack the capacity to meet and costs that they lack the resources to afford.
Aggravate adverse impacts through the use of immediate (or too-quick) or zero-tolerance termination rights.
Aggravate adverse impacts by exercising termination rights irresponsibly.
Upcoming Webinar on CSDDD
To help you navigate these changes, we are hosting a webinar on September 5, 2024. The webinar will cover the five key steps to align your contracts with CSDDD requirements. Post-event, you can access the CSDDD bundle, which includes the webinar recording, a podcast, the presentation slides, and a detailed briefing.
Join Our Webinar
Please register for our live webinar on 5 September 2024 to navigate these changes effectively. We’ll provide expert insights and practical strategies for compliance.
Additional Resources
Recorded Webinar: Available for download.
Slides & Briefing Note: Access our detailed 20+ page briefing note and presentation slides.
Audio Version: Listen to a summary of the directive.
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