CSDDD
Overview
The Corporate Sustainability Due Diligence Directive (CSDDD) establishes an EU framework for corporate human rights and environmental due diligence. It requires very large companies to identify, prevent, mitigate and address actual and potential adverse impacts on people and environment in their own operations, subsidiaries and chains of activities.
The Directive aims to harmonise due diligence requirements across the EU and to a large extent aligns corporate conduct with international standards, including the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
The CSDDD requires companies to act on human rights and environmental impacts, and to disclose this information based on sustainability reporting rules. For investors, this information can help to assess how companies manage sustainability-related risks and impacts across their value chains.
The Corporate Sustainability Due Diligence Directive (CSDDD) requires very large companies to identify, prevent, mitigate and address actual and potential adverse impacts on people and environment in their own operations, subsidiaries and chains of activities.
Current framework
Who is in scope?
Following the Omnibus Simplification Directive, the CSDDD applies to a narrower group of very large companies:
- EU companies: more than 5,000 employees and more than €1.5 billion in net worldwide turnover.
- Non-EU companies: more than €1.5 billion in net turnover in the EU including on a consolidated basis for ultimate parent companies of groups.
Due diligence requirements
In-scope companies must:
- identify, prevent, mitigate and end actual or potential adverse impacts;
- integrate due diligence into policies and risk management systems;
- operate complaints and notification procedures;
- monitor the effectiveness of their actions; and
- communicate publicly on due diligence.
The Omnibus I Simplification Directive significantly impacted the CSDDD by:
- Reducing its scope by 70%;
- Postponing its application to July 2029;
- Focusing due diligence on the most likely and severe impacts, based on reasonably available information;
- Deleting provisions on mandatory adoption and implementation of climate transition plans; and
- Removing the EU-wide civil liability regime, subject to future review.
Implementation guidelines, currently developed by the European Commission, will be critical to ensure companies apply the rules in a meaningful and sufficiently uniform manner.
What’s next?
Implementation guidelines
Between June and August 2026, the European Commission consulted on CSDDD implementation guidelines (see Eurosif’s response here). The consultation covered due diligence processes, risk identification and prioritisation, appropriate measures, stakeholder engagement, data sources, digital tools and model contractual clauses.
The first CSDDD guidelines are expected to be published in 2027.
Future implementation
Member States are expected to transpose the amended Directive by July 2028, and in-scope companies are expected to apply the rules from July 2029.
Read more about CSDDD below.
