The Corporate Sustainability Due Diligence Directive (CSDDD) is an EU legislative proposal which would require companies to identify, report and address the impact of their operations on human rights and the environment throughout their value chains. Additionally, companies under scope would have to adopt and put into effect transition plans to align their business model and strategy with the goal of limiting global warming to 1.5°C, in line with other EU legislation such as the CSRD.

The CSDDD has now been formally approved by European institutions. It will enter into force in H2 2024 and start apply from 2027. Financial institutions are under the scope of the Directive, including for transition plans requirements, but are exempted from conducting due diligence on their clients. The extension of due diligence requirements to financial institutions’ entire value chain is subject to a review clause, two years after entry into force.

The Corporate Sustainability Due Diligence Directive (CSDDD) aims to harmonise corporate sustainability due diligence requirements across the EU, which are currently addressed through a patchwork of legislation.