Summary
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Details
- European Union
The CSDDD is mandatory for all large EU and non-EU companies meeting the thresholds.
Mandatory Requirements:
Establish risk-based due diligence covering entire value chains.
Adopt a transition plan compatible with climate goals.
Implement grievance and monitoring mechanisms.
Publicly disclose progress through sustainability reporting.
Exceptions and Flexibility:
SMEs are not directly covered but may be indirectly affected through supplier obligations.
Implementation is phased by company size and turnover.
Member States retain limited discretion in enforcement mechanisms but must meet EU-level standards.
Deep dive
What’s Required
The Corporate Sustainability Due Diligence Directive (CSDDD), adopted in May 2024, introduces a binding legal framework requiring companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts throughout their operations, subsidiaries, and global value chains.
Companies covered by the directive must:
Integrate due diligence into corporate policies and risk management systems.
Conduct regular risk assessments for potential and actual human rights and environmental harms.
Develop prevention and mitigation plans and monitor effectiveness.
Establish complaint and remediation mechanisms accessible to affected stakeholders.
Adopt and publish a transition plan aligning their business strategy with the Paris Agreement’s 1.5°C target.
Important Deadlines
24 May 2024: Directive adopted by the European Parliament and Council.
2026–2029: Gradual application by company size:
2027 → Companies with ≥5,000 employees and ≥€1.5 billion turnover.
2028 → Companies with ≥3,000 employees and ≥€900 million turnover.
2029 → Companies with ≥1,000 employees and ≥€450 million turnover.
By 2026: Member States must transpose the directive into national law.
Current Status
The CSDDD is adopted and in the process of national transposition across EU Member States. It is a cornerstone of the European Green Deal and the EU’s broader sustainability agenda, harmonising existing national due diligence laws such as France’s Duty of Vigilance Law and Germany’s Supply Chain Due Diligence Act.
Once implemented, the directive will apply to both EU and non-EU companies operating in the Single Market that meet the thresholds. It complements other key frameworks, including the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy Regulation, by embedding sustainability into corporate governance and decision-making.
Penalties for Non-Compliance
Member States must establish effective, proportionate, and dissuasive penalties. These include:
Administrative fines of up to 5% of global annual turnover.
Civil liability for damages caused by failure to prevent adverse impacts.
Possible exclusion from public procurement or state aid for serious non-compliance.
Supervision will be conducted by national authorities coordinated through a European Network of Supervisory Bodies, supported by the European Commission.
Examples of Known Violations
As of 2025, no cases have yet been reported, as Member States are still transposing the directive. However, its structure mirrors national precedents already in force, and enforcement is expected to begin once the first national frameworks are operational in 2027.
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