Corporate Sustainability Due Dilligence Directive (CSDDD)
Introduction
The Corporate Sustainability Due dilligence Directive (CSDDD) came into effect on July 25th 2024. Designed to foster sustainable and responsible business practices, the CSDDD imposes legal obligations on large companies to systematically identify, prevent, mitigate, and account for adverse impacts on human rights and the environment.*
This directive is a central pillar in the EU’s broader sustainability agenda, aligning with initiatives like the European Green Deal and the Corporate Sustainability Reporting Directive (CSRD).
What is the CSDDD?
The CSDDD ("CS Triple D") is an EU regulation designed to make companies more responsible for their impact on people and the planet. It’s part of the EU’s bigger push for sustainability and ethical business, alongside other initiatives like the European Green Deal and the Corporate Sustainability Reporting Directive (CSRD).
What does it aim to do?
At its core, the CSDDD aims to ensure that large companies—and their supply chains—actively identify, prevent, and address negative effects on human rights and the environment. This means companies can’t just focus on their own operations; they also need to look at their suppliers and partners, both inside and outside the EU.
What's new about it?
While some countries already have similar laws, the CSDDD creates a common standard across the EU. It has a focus on the supply chain and introduces new aspects:
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Covering the entire value chain, not just direct suppliers.
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Requiring companies to take documented action.
- Applying to a wider range of companies, including some non-EU businesses that operate in the European market.
Who is affected?
The CSDDD doesn’t apply to every business, but it does cover a significant number of large companies operating in the EU and beyond.
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EU companies:
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+/- 6,000 companies - >1000 employees and >EUR 450 million turnover (net) worldwide.
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non-EU companies:
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+/- 900 companies - > EUR 450 million turnover (net) in EU.
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Companies affected indirectly
Even if a company isn’t directly covered by the CSDDD, it might still feel the effects. That’s because covered companies must look at their entire value chain—including suppliers and subcontractors. Smaller businesses may be asked to provide information or improve their practices to help larger partners comply.
Implementation timeline
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July 25, 2024: The CSDDD becomes EU law.
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By July 26, 2026: Member States must adopt the law nationally.
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From 2027: Companies with over 5,000 employees and €1.5 billion turnover must comply.
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From 2028: Companies with over 3,000 employees and €900 million turnover must comply.
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From 2029: Companies with over 1,000 employees and €450 million turnover must comply.
Compliance starts with financial years beginning after January 1 of the following year. This phased timeline allows companies time to prepare gradually.
CSDDD requirements
The heart of the CSDDD is the due diligence process—a structured approach companies must follow to manage risks and prevent harm throughout their operations and value chains.
The following requirements apply:
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Implementation of a due diligence policy covering operations and value chain.
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Identification, assessment and monitoring of human rights and environmental risks in business and supply chain.
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Preventing or supporting remedies for any harm caused by the business or supply chain.
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Engagement with stakeholders, including workers and affected communities.
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Publicly reporting on the due diligence process, findings, and actions taken.
Achieve compliance
An ESG platform is a practical and efficient way for companies to prepare for CSDDD requirements because it streamlines the entire due diligence process—from mapping supply chains and assessing risks to tracking corrective actions and generating compliance reports.
With automated data collection, centralized documentation, and built-in reporting tools, companies identify and manage CSDDD compliance seamless and accurate.
Take a look at a CSDDD solution
See how it works (infographic)
This guide not only provides insights into a digital CSDDD solution, but also presents an integrated ESG suite designed to outperform industry standards.