Corporate Sustainability Due Diligence Directive (CSDDD)

  • The Corporate Sustainability Due Diligence Directive (CSDDD) is a European Union directive aimed at fostering sustainable and responsible corporate behaviour. Adopted in 2024 and in force since July 2024, it requires companies within its scope to identify and address adverse human rights and environmental impacts within their own operations, those of their subsidiaries and across relevant parts of their chains of activities.

    The Directive establishes a framework for corporate due diligence, requiring in-scope companies to take appropriate measures to prevent, mitigate and address adverse impacts and to integrate sustainability considerations into their business practices and decision-making.

  • Improve Human Rights and Environmental Protection:
    The CSDDD aims to enhance the protection of human rights and the environment by requiring companies within its scope to conduct risk-based due diligence. This includes identifying actual and potential adverse impacts, taking appropriate measures to prevent or mitigate them, addressing impacts where they occur, and monitoring the effectiveness of these measures.

    Increase Transparency and Accountability:
    The Directive requires companies to communicate relevant information about their due diligence policies and measures and to integrate sustainability considerations into their corporate governance and decision-making processes. This helps strengthen accountability and gives stakeholders greater insight into how companies address adverse human rights and environmental impacts.

    Harmonize the Legal Framework:
    The CSDDD establishes a harmonised legal framework across the EU, creating greater legal certainty and a more level playing field for companies. By establishing common due diligence requirements, the Directive aims to reduce fragmentation across Member States while limiting unnecessary administrative burdens.

    Core Due Diligence Obligations include:

    • Identification and assessment: Identify and assess actual and potential adverse human rights and environmental impacts in the company’s own operations, those of its subsidiaries and relevant parts of its chains of activities, with a focus on areas where impacts are most likely to occur.

    • Prevention and mitigation: Take appropriate measures to prevent or adequately mitigate potential adverse impacts and bring actual adverse impacts to an end or minimise their extent.

    • Remediation: Provide or cooperate in remediation where the company has caused or contributed to an actual adverse impact, and maintain appropriate complaints and notification mechanisms.

    • Monitoring: Monitor the effectiveness of due diligence measures and, where appropriate, adjust them based on findings and developments.

    • Communication: Publicly communicate relevant information about due diligence policies and measures in accordance with the applicable requirements.

  • Following the Omnibus I amendments, the CSDDD applies to a much narrower group of very large companies than under the original Directive.

    Large EU Companies

    The CSDDD applies to EU companies and partnerships with more than 5,000 employees and more than €1.5 billion in net worldwide turnover, including on a consolidated basis for ultimate parent companies of groups.

    Large Non-EU Companies

    Non-EU companies are covered where they generate more than €1.5 billion in net turnover within the EU, including on a consolidated basis for ultimate parent companies of groups.

    Franchising and Licensing

    Certain franchising and licensing arrangements can also bring companies or ultimate parent companies of groups into scope where the applicable turnover and royalty thresholds are met. Specific conditions apply.

    SMEs and Smaller Business Partners

    Micro companies and SMEs are not directly subject to the CSDDD. However, they may be indirectly affected when they are part of the chain of activities of a company within scope.

    The amended Directive introduces measures intended to limit the “trickle-down effect” on smaller business partners. In-scope companies must base their due diligence efforts on reasonably available information and cannot systematically require disproportionate information from smaller business partners. The Directive also provides supporting measures, including guidance and model contractual clauses.

    Overall, the revised CSDDD focuses mandatory due diligence requirements on very large companies with significant economic activity and substantial influence over their chains of activities.

    • 25 July 2024 – CSDDD enters into force
      The Corporate Sustainability Due Diligence Directive entered into force, establishing EU-wide requirements for corporate sustainability due diligence.

    • 26 February 2025 – Omnibus I proposed
      The European Commission proposed significant changes to the CSDDD as part of its Omnibus I simplification package, aimed at reducing administrative burdens and making the due diligence framework more proportionate.

    • 14 April 2025 – “Stop-the-clock” Directive adopted
      The EU adopted a “stop-the-clock” Directive postponing the application of certain CSDDD requirements and giving companies and Member States additional time while the substantive amendments were negotiated.

    • 24 February 2026 – Omnibus I finally approved
      The Council gave final approval to the substantive amendments to the CSDDD. The revised Directive significantly narrows its scope to companies with more than 5,000 employees and more than €1.5 billion in net turnover, while also simplifying due diligence requirements and reducing the burden on smaller business partners.

    • 18 March 2026 – Amending Directive enters into force
      Directive (EU) 2026/470 entered into force following its publication in the Official Journal. The amended CSDDD now forms the basis for the revised due diligence framework.

    • 26 July 2028 – National transposition deadline
      Member States must transpose the amended CSDDD requirements into national law by 26 July 2028, with specific provisions on the level of harmonisation subject to the timetable set out in the Directive.

    • 26 July 2029 – Application of the revised CSDDD
      Member States must apply the national measures implementing the revised CSDDD from 26 July 2029. The revised due diligence obligations will therefore begin to apply from this date to companies within the new scope.

    • 2029 onwards – Ongoing due diligence
      Companies within scope will be expected to maintain risk-based due diligence processes covering their own operations, subsidiaries and relevant parts of their chains of activities, supported by monitoring, complaints and notification mechanisms and public communication.

    • 2030 – Reporting requirements
      Specific reporting-related provisions under Article 16 will apply for financial years starting on or after 1 January 2030.

  • 26 February 2025 – Omnibus I proposed
    The European Commission proposed amendments to the CSDDD as part of its first Omnibus simplification package. The proposal aimed to reduce administrative burdens, simplify due diligence requirements and limit the indirect compliance burden on smaller companies in value chains.

    April 2025 – “Stop-the-clock” Directive adopted
    The EU adopted a “stop-the-clock” Directive postponing the application of certain CSDDD requirements. The measure provided additional time for companies and Member States while the substantive amendments to the Directive were negotiated.

    23 June 2025 – Council negotiating position
    The Council agreed its position on the substantive amendments to the CSDDD. It proposed raising the scope threshold to 5,000 employees and €1.5 billion in net turnover and shifting due diligence towards a more risk-based approach.

    9 December 2025 – Council and Parliament reach provisional agreement
    The Council and European Parliament reached a provisional agreement on the Omnibus I sustainability simplification package. For the CSDDD, the agreement included the higher thresholds of 5,000 employees and €1.5 billion net turnover, as well as measures to reduce the trickle-down effect on smaller business partners.

    24 February 2026 – Omnibus I finally approved
    The Council gave final approval to the Omnibus I amendments to the CSRD and CSDDD. The revised CSDDD significantly narrows its scope and simplifies the due diligence framework. Companies within scope can focus their assessment on areas where actual or potential adverse impacts are most likely to occur and, where risks are comparable, may prioritise direct business partners. The revised rules also require companies to base their efforts on reasonably available information, helping limit unnecessary information requests to smaller business partners.

    18 March 2026 – Revised CSDDD enters into force
    The amending Directive (EU) 2026/470 entered into force, formally introducing the substantive changes agreed under Omnibus I.

    26 July 2028 – National transposition
    Member States must transpose the revised CSDDD into national law by 26 July 2028, ahead of the application of the new rules from July 2029.

    26 July 2029 – Revised CSDDD applies
    The amended CSDDD will begin to apply from 26 July 2029. The revised framework focuses mandatory due diligence obligations on very large companies and introduces a more targeted, risk-based approach to identifying and addressing adverse impacts.

    Current status – August 2026
    The CSDDD is no longer awaiting substantive legislative agreement. The Omnibus I amendments have been adopted and are in force. The focus has now shifted to national transposition, implementation and preparation for application from July 2029. The European Commission is also developing guidance and voluntary model contractual clauses to support companies in implementing the revised due diligence framework. Main guidance is due by 26 July 2027, with additional guidance by 26 July 2028.