Due Diligence Directive (CSDDD)

Overview

The Corporate Sustainability Due Diligence Directive (CSDDD) is EU legislation requiring companies to identify, prevent, and mitigate adverse impacts on human rights and the environment throughout their value chains.

Scope

Companies Covered

• EU companies: 500+ employees + €150M+ revenue
• Other companies: If in high-impact sectors (textiles, agriculture, mining)
• Timeline: Phased implementation 2025-2027

High-Risk Sectors

• Textiles and footwear
• Agriculture, forestry, fisheries
• Mining and quarrying
• Wholesale/retail of certain products

Due Diligence Requirements

Process Steps

1. Mapping: Identify value chain
2. Assessment: Evaluate actual/potential impacts
3. Prevention: Measures to prevent adverse impacts
4. Mitigation: Actions to mitigate
5. Monitoring: Track effectiveness
6. Communication: Report to stakeholders

Value Chain Coverage

• Upstream: Suppliers, raw materials
• Downstream: Distribution, use, end-of-life

Mandatory Requirements

Climate Transition Plan

• For large companies (1500+ employees)
• Must be compatible with 1.5°C target
• Include emissions reduction targets

Director Duties

• Oversight of due diligence
• Integration into strategy
• Accountability for implementation

Civil Liability

• Companies liable for damages
• Failure to prevent can result in claims

Connection to Other Legislation

CSRD

• CSDDD complements CSRD
• Both require value chain due diligence
• Coordinated reporting

EU Taxonomy

• Environmental due diligence overlaps
• DNSH requirements aligned

Supply Chain Laws

• German Supply Chain Act
• French Duty of Vigilance
• CSDDD harmonizes across EU

Practical Guidance

For Companies

1. Map value chain: Identify all business relationships
2. Assess impacts: Human rights and environment
3. Develop plan: Prevention and mitigation
4. Implement: Actions and procedures
5. Report: Public disclosure
6. Monitor: Ongoing due diligence

Key Actions

• Update supplier contracts
• Establish grievance mechanisms
• Train teams on due diligence
• Engage stakeholders

Timeline

• 2024: Final adoption expected
• 2025: Largest EU companies (5000+ employees)
• 2026: Large companies (3000+)
• 2027: Companies (1000+)

Key Takeaways

• CSDDD requires mandatory due diligence
• Covers human rights and environment
• Applies to entire value chain
• Climate transition plans required
• Civil liability for non-compliance
• Phased implementation 2025-2027