European Green Deal and International Contracts: Adapting to the New Sustainability Due Diligence

The European ecological transition is not just a declaration of intent. With the final approval of the Corporate Sustainability Due Diligence Directive (CS3D) by the Council of the European Union on 24 May 2024, the European Green Deal enters strongly into the contractual relationships of companies, Imposing new sustainability obligations along the entire value chain.

Italian companies operating internationally are called upon to update their commercial contracts in order to respond to new legal responsibilities in environmental, social and governance (ESG) matters, avoiding litigation risks, Sanctions and exclusion from global procurement or supply chains.

The European regulatory environment is changing

The new CS3D directive introduces binding environmental and social due diligence obligations for larger companies and, indirectly, for their partners, subcontractors and customers.

Legislative process of the CS3D (Corporate Sustainability Due Diligence Directive)

step	Date	details
Approval by the European Parliament	April24,2024	Final vote in favour
Formal adoption by the EU Council	May 24, 2024	Conclusion of the legislative process
Publication in the Official Journale	Expected by July 2024	Effective 20 days after
Transposition into national law	By 2026	Obligation for all member states
Practical application for enterprises	2027 to 2029	Based on the size thresholds of the Directive

What does the new CS3D directive mean?

The CS3D requires large companies (over 1000 employees and €450 million in annual turnover) to:
– Identify, prevent and mitigate negative impacts on human rights and the environment generated by its own activities and those of its business partners;
– Integrate due diligence into risk management systems and contractual processes;
– Provide transparency and public reporting on the effectiveness of the measures taken.

SMEs are also indirectly involved, as suppliers or subcontractors of undertakings covered by the Directive.

The consequences in case of default

Companies that do not comply with the obligations imposed by CS3D may be:
– Sanctioned by national supervisory authorities;
– Sued by affected stakeholders, NGOs or consumers;
– Excluded from public procurement or private supply chains that impose high ESG standards.

The contractual implications for Italian companies

The implementation of CS3D requires a thorough review of international contracting. The main implications include:

Detailed and binding ESG clauses
Contracts should include precise obligations on ESG standards, early termination mechanisms and adjustment commitments for non-EU suppliers.
Contractual due diligence
Inclusion of transparency and audit obligations in contracts, and clauses governing reactions to ESG non-compliance.
ESG renegotiation clauses
Provision of hardship clauses and renegotiation in the event of a regulatory or environmental crisis.
Choice of applicable law and forum
Promote the right of EU Member States and international arbitrators (e.g. ICC, LCIA).
Risk of contractual invalidity
Contracts that are not up-to-date may be disapplied by the courts or ineligible for the standards required by funds or principals

The role of Rosano Law Firm

The Law Firm Rosano supports Italian companies in the process of adaptation with:
– Drafting of tailor-made ESG contractual clauses;
– Verification of international contractual compliance;
– Support in relations with authorities and foreign clients;
– Internal training and regulatory updates;
– Assistance in any litigation on ESG issues.

The European Green Deal is no longer a theoretical horizon: it is already positive right. Italian companies must adapt their contracts today to ensure solidity, legality and continuity in their global operations.

Adapting now means protecting the future.

Studio Legale Rosano – 10 giugno 2025