Corporate Sustainability Due Diligence Directive (CSDDD)

On this page you can find information about the Corporate Sustainability Due Diligence Directive (CSDDD or CSD3) including FAQ and the full law text.

FAQ for CSDDD

Full text CSDDD

Omnibus Proposal CSDDD

CSDDD

FAQ for the EU Supply Chain Directive (CSDDD)

What is the European Supply Chain Law?

FAQ CSDDD

The Corporate Sustainability Due Diligence Directive (CSDDD) is a directive of the European Union that requires companies to identify, prevent, mitigate, and report on sustainability risks throughout their entire supply chain. The directive is often referred to as the European Supply Chain Act.

The goal of the CSDDD is to ensure that companies take responsibility for the social and environmental impacts of their business activities. This includes respecting human rights and protecting the environment. The directive requires companies to take risk mitigation measures and publicly document their progress. It aims to promote responsible corporate governance and sustainable business practices across the EU.

The CSDDD underwent significant changes on February 26, 2025, due to the Omnibus proposal by the European Commission (see Omnibus proposal changes further below). Since the proposal has not yet been adopted by the European Parliament and the Council of the European Union, further modifications are possible, meaning the adjustments mentioned are not final.

You can find the full text of the CSDDD from the European Commission here, as well as the complete Omnibus proposal text here.

To whom does the CSDDD apply?

By July 26, 2026, EU member states like Germany must transpose the CSDDD into their national legislation.

The exact timeline and the companies affected depend on the number of employees and net turnover:

2027: Companies with 5,000+ employees and a turnover exceeding €1,500 million
2028: Companies with 3,000+ employees and a turnover exceeding €900 million
2029: Companies with 1,000+ employees and a turnover exceeding €450 million

What are the sanctions for companies that do not (correctly) implement the CSDDD?

Violations are subject to fines of at least 5% of worldwide net turnover.

How do companies implement the CSDDD?

Companies implement the Corporate Sustainability Due Diligence Directive (CSDDD) by systematically examining their supply chains for sustainability risks. This includes identifying and assessing risks related to human rights, environmental impact, and other social aspects throughout their entire value chain.

The process consists of several steps:

Risk analysis
Implementation of measures to prevent and mitigate risks
Reporting and transparency
Engagement of all relevant stakeholders

Additionally, companies falling under the directive must ensure that their business strategies align with the goal of limiting global warming to 1.5°C.

What are the Omnibus Proposal Changes for the CSDDD?

Omnibus Proposal

Extended Implementation Deadline

The Omnibus Initiative proposes extending the deadline for EU member states to implement the CSDDD into national law by one year. As a result, the original start date for the first wave of companies shifts from July 26, 2027, to July 26, 2028.

Changes to Sanctions and Civil Liability

Instead of a fixed minimum fine of 5% of global net turnover, the European Commission now plans to issue guidelines instead of setting a mandatory fine. Regarding civil liability, the EU Commission intends to grant member states more flexibility. Previously, companies could be held civilly liable for intentional violations. This requirement is now set to be removed.

Restricted Due Diligence Obligations

Initially, companies were required to assess all activities along the entire supply chain, including indirect business partners. The new proposal limits obligations only to a company’s own operations, subsidiaries, and direct business partners. Indirect business partners will generally be excluded, except where risks or violations are suspected.

Elimination of the Contract Termination Requirement

Under the original CSDDD, companies were required to terminate contracts under certain conditions if milder measures (such as suspending collaboration or corrective action plans) were unsuccessful. This requirement will now be removed to prevent disruptions in critical supply chains and allow suppliers time to address deficiencies.

Relaxed Monitoring Obligations

Instead of an annual review of the effectiveness of risk prevention measures, companies will now only need to conduct reviews every five years or in response to specific incidents. The EU Commission aims to reduce the administrative burden for businesses.

Eased Stakeholder Engagement Requirements

Previously, stakeholders were involved in multiple stages of the due diligence process, including affected individuals, consumers, and human rights or environmental organizations. Moving forward, only directly affected individuals and their representatives must be engaged.

Loosened Climate Plan Implementation Obligations

Companies must still develop climate plans with concrete measures, but the explicit obligation to implement these measures has been removed. This change provides greater flexibility in how companies comply.

Note: Since the Omnibus proposal has not yet been adopted by the European Parliament and the Council of the European Union, further changes remain possible. The listed modifications are therefore not final.

(Status: March 2025)