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: 1,000+ employees and €450M+ worldwide net turnover (final thresholds after the 2025 Omnibus package, raised from the original 2024 text's lower figures)
• Other companies: phased groups for large companies in high-impact sectors (textiles, agriculture, mining)
• Timeline: application staggered from 2027 (largest companies), extending to 2028 and beyond after the Omnibus delay

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

• Applies to a subset of in-scope companies above additional turnover/climate-impact thresholds (narrowed by the 2025 Omnibus package — not all in-scope companies)
• Must be compatible with the 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 (significantly narrowed by the 2025 Omnibus package — more restrictive conditions and reinforced company defences)
• 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

• July 2024: Directive (EU) 2024/1760 adopted and entered into force
• 2025: Omnibus package raises scope thresholds and delays application by one year
• 2027: Application begins for the largest in-scope companies
• 2028+: Application extends to remaining in-scope groups

Key Takeaways

• CSDDD requires mandatory due diligence
• Covers human rights and environment
• Applies to entire value chain
• Climate transition plans required (subset of in-scope companies)
• Civil liability for non-compliance (narrowed by 2025 Omnibus)
• Application from 2027 (largest companies), extending to 2028+

References

• EUR-Lex — Directive (EU) 2024/1760 — Corporate Sustainability Due Diligence Directive — adopted text: scope, due-diligence duties, climate plan, civil liability
• European Commission — Corporate Sustainability Due Diligence — scope summary and 2025 Omnibus changes (thresholds, timeline, liability narrowing)