In September, the Corporate Responsibility Inquiry presented its proposal, SOU 2026:56, on how the EU Directive on Corporate Sustainability Due Diligence (CSDDD) should be implemented into Swedish law. The Inquiry proposes a new law on corporate responsibility that sets requirements for how the largest companies address risks to human rights and the environment, both in their own operations and in their supply chains. Here, Setterwalls’ experts in environmental law and administrative law summarize what the proposal entails and what issues may arise when the law is applied.

The Proposal in Brief

Requirements for Risk-Based Management of Human Rights and the Environment

The proposal means that larger companies will be required to identify, assess, and manage the adverse impacts that their operations have or may have on human rights and the environment. This does not mean that negative impacts must never occur. Rather, the key requirement is that the company has appropriate procedures in place and manages the risks that are identified.

In practice, this means that affected companies need to develop and implement guiding documents, policies, procedures, and risk management processes that describe how the company addresses environmental and human rights issues. They also need to establish specific complaint procedures for reporting adverse impacts of their operations. Companies that already have a whistleblower function should therefore determine whether existing channels can be used and, if necessary, establish procedures to keep the various reporting channels separate.

Which Companies Are Affected?

In simple terms, the requirements apply to companies that, at the group level, have more than 5,000 employees and net revenue exceeding 1.5 billion euros. However, the requirements do not apply solely to the company’s own operations. Companies must also identify risks at subsidiaries and business partners and adopt codes of conduct, principles, and similar terms and conditions that such companies must follow. In practice companies owned by a covered company—or those that supply goods or services to such a company—are therefore also affected. The greatest impact is expected in industries with complex, global, and high-risk value chains.

Supervision and Sanctions

The National Board of Trade (Sw. Kommerskollegium) is proposed to serve as the supervisory authority and will be granted significant powers in cases of suspected violations. If a company fails to comply with the provisions of the law regarding how the company is to address environmental and human rights issues, or otherwise violates the law, the authority shall, among other things, be able to order the company to cease the violation and take corrective measures, if necessary, subject to conditional fines and with immediate effect. Failure to comply with the law may also result in administrative fines ranging from SEK 5,000  up to three percent of the group’s net revenue.

Overlap with Environmental Law

The requirements set forth under the new law are similar in certain respects to those of the Swedish Environmental Code, including the general rules of consideration, environmental assessments, and rules on self-monitoring. For a company operating in Sweden, the same risk may therefore need to be addressed under both sets of regulations. To avoid double penalties, it is proposed that an administrative fine under the new law may not be imposed if an administrative fine has already been imposed for the same violation under another statute, or if a penalty payment under another statute forms the basis for a request for imposition. It should be emphasized that authorities and courts must take the prohibition against double jeopardy (ne bis in idem) into account regardless of the circumstances, and that it applies in all situations. Beyond that, however, the precise demarcation between the supervisory powers under the Environmental Code and the new supervisory powers will need to be determined on a case-by-case basis.

Setterwalls’ Comments

If the proposal is implemented, entirely new rules will be introduced into Swedish law regarding how companies are to address environmental and human rights issues. At the same time, the National Board of Trade will be granted significant new powers to investigate and make decisions to ensure compliance with the law.

It is proposed that the National Board och Trade´s decisions be subject to appeal to general administrative courts. This raises several administrative law and procedural issues, and, among other things, will place high demands on the authority to draft sufficiently precise penalty orders and to ensure that its decisions and measures are proportionate. As the Inquiry itself notes, this involves challenging legal issues for which there is no established case law, and the level of administrative fines will also need to be developed through the application of the law. Given that the new law is proposed to apply to companies with a global revenue of 1.5 billion euro, and the penalty may amount to three percent of the group’s revenue, there is, at least in theory, a possibility that the penalties could reach very significant amounts.

The law is proposed to take effect on July 26, 2029. Companies that may be affected nevertheless have good reason to begin integrating risk assessments regarding human rights and the environment into their own operations, throughout the corporate group, and in their supply chains.

The proposal is now being sent out for public comment, and comments must be submitted by February 8, 2027. Setterwalls is closely monitoring developments.

Setterwalls’ Environmental Group and Administrative Proceedings Group have extensive experience assisting companies with impact analyses and risk assessments. We also frequently act as counsel in regulatory matters and in court. If you would like to learn more about how the new proposed law might affect your business, please feel free to contact us.