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Overview

The CSDDD establishes mandatory due diligence requirements for companies to identify, prevent, and mitigate adverse human rights and environmental impacts in their operations and value chains. It aims to foster responsible corporate behaviour and align business practices with EU sustainability goals.

Key Aspects

• Obligation to identify, prevent, and mitigate adverse impacts on human rights and the environment.

• Requirement to integrate due diligence into corporate policies.

• Establishment of grievance mechanisms for stakeholders.

Scope

Directive EU/2026/470 recently adjusted the adoption thresholds of the CSDDD to the following:

• EU companies with >5,000 employees and >1.5 billion EUR net turnover globally

• Non-EU companies with > 1.5 billion EUR net turnover in the EU

• Non-EU companies with >75 million EUR royalties and >275 million EUR net turnover in the EU

• Other companies may be affected indirectly

Mandatory adoption has been postponed by two years compared to the original legislation, with obligations applying by July 2029 and mandatory reporting by FY 2030. Hence, the notion of a staggerd entry into force is no longer included in the CSDDD.

It is important to note that these figures reflect the current legal status to the best of our knowledge. Ongoing discussions regarding potential modifications to the scope are in progress; however, these changes have yet to be enacted into law.

Disclosure Requirements

• Annual Due Diligence Statement
  Publish an annual statement on due diligence efforts within 12 months after the financial year-end and make it publicly available online.

• Value Chain Responsibility
  Assess and address human rights and environmental risks across the full value chain, including upstream suppliers and downstream operations.

• Integration into Corporate Policies
  Embed due diligence processes and commitments into the company’s policies and management systems.

• Grievance Mechanisms
  Establish mechanisms to allow stakeholders to report concerns about actual or potential adverse impacts.

• Climate Plan Requirement
  Develop and adopt a climate transition plan aligned with the Paris Agreement’s targets.

• Integration with the CSRD
  Companies subject to the Corporate Sustainability Reporting Directive are exempt from separate CSDDD reporting obligations.

Further Aspects

• SMEs are excluded from direct obligations but may be indirectly impacted through supply chain requirements.

• Grievance Mechanisms

  • Establishment of accessible complaint mechanisms for affected parties such as workers, communities, and other stakeholders.

• Civil Liability

  • Companies can be held accountable for damages caused by insufficient due diligence practices, enforcing the "polluter pays" principle.

• Sectoral Focus

  • High-risk industries like agriculture, textiles, and extractive industries face stricter obligations due to their environmental and human rights impact.

Omnibus Initiative

As mentioned above, the time of application has been adjusted with Directive EU/2025/794. In addition, the "Content Proposal" (COM/2025/81) foresees the exclusion of financial companies from due diligence requirements, a new definition of the term stakeholder and new treatment of civil liability. Moreover, the Substance Proposal addresses the CSDDD's scope. Under this proposal, the threshold for mandatory adoption would be set at 5,000 employees and a turnover of EUR 1.5 billion.

For more details visit the Omnibus overview.

Links

EUR-Lex, CSDDD

European Commission, Corporate sustainability due diligence

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