The CSDDD Effect: Assessing the Impact of the EU’s Impending Corporate Sustainability Mandate on Japanese Companies

This issue brief explores the significant impact of the European Union (EU)’s expected Corporate Sustainability Due Diligence Directive (CSDDD) on global corporate responsibility, with a specific focus on its implications for Japanese companies. The CSDDD, which will mandate that companies conduct human rights and environmental due diligence (HREDD) across their value chains, extends the influence of the EU’s regulatory policy to companies well beyond the borders of Europe. Japanese companies, which have traditionally been less integrated in HREDD practices, now face a critical need to align their corporate policies with these new standards to maintain their global business relevance.

Recent developments, including the release of “Guidelines on Respecting Human Rights in Responsible Supply Chains” by the Government of Japan, have spurred a gradual shift towards more stringent HREDD practices among Japanese businesses. Nonetheless, with the CSDDD set to be finalized by the end of 2024, its adoption will present several new challenges and opportunities for Japanese corporate actors.

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