What is CSDDD?

CSDDD stands for “Corporate Sustainability Due Diligence Directive” and is an EU directive, passed on 25 July 2024, designed to hold companies accountable for their environmental and human rights choices. The directive is a legal framework that requires businesses to identify, prevent, and mitigate negative effects from their value chain.

By Klappir

CSDDD - Corporate Sustainability Due Diligence Directive

“On 25 July 2024, the Directive on corporate sustainability due diligence (Directive 2024/1760) entered into force. The aim of this Directive is to foster sustainable and responsible corporate behavior in companies’ operations and across their global value chains. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.” (1)

CSDDD is part of the EU’s broader sustainability and human rights strategy. It aims to ensure responsible business conduct by integrating environmental and human rights due diligence into corporate governance. Furthermore it is intended to level the playing field by standardizing sustainability obligations across industries and EU member states.

Companies falling under the scope of the directive must map and assess risks by evaluating their value chain, implementing due diligence policies, monitor and report progress and engage with stakeholders.

The directive primarily targets large companies operating in the EU, including: (See below amendments due to Omnibus I).

EU-based companies meeting specific employee and revenue thresholds.
Non-EU companies that generate significant revenue within the EU market.
High-risk sectors such as mining, textiles, and agriculture, which have a greater environmental and social footprint.

How does CSDDD relate to CSRD?

The Corporate Sustainability Reporting Directive (CSRD) focuses on reporting sustainability performance, whereas CSDDD requires proactive due diligence in business operations. Together, these directives ensure that companies both report on and act on sustainability risks.

Additional information 27.02.2025:

EU simplification package, Omnibus I

On February 26, 2025, the European Commission published an "Omnibus Simplification Package" or EU Omnibus I, which lists changes and amendments to CSDDD.

The new proposal suggests extending the implementation deadline by one year, allowing companies to delay compliance from July 2027 to July 2028. Additionally, the reporting scope has been reduced, shifting the requirement from covering the entire value chain to only Tier 1 suppliers.

Companies must also address other parts of the supply chain if there are plausible indications of human rights or environmental violations. Negative impacts further down the supply chain must be mitigated through "contractual cascading", requiring Tier 1 suppliers to comply with the company's code of conduct and enforce the same standards within their own supply chains.

Additionally, the right to request information is restricted for companies with fewer than 500 employees, but such requests are still allowed if deemed necessary and proportionate.

By Klappir14 August 2024