Corporate Sustainability Due Diligence Directive (CSDDD)

About the Corporate Sustainability Due Diligence Directive (CSDDD)

The EU Due Diligence Navigator for Partner Countries supports a wide range of actors in preparing for expectations stemming from the Corporate Sustainability Due Diligence Directive (CSDDD). 

The CSDDD establishes a mandatory standard for responsible business conduct for large EU companies, as well as for non-EU companies generating substantial turnover on the EU market. It requires companies to identify and address human rights and environmental risks, as well as prevent and mitigate adverse impacts throughout their global value chains. 

As a result, suppliers, producers, and business partners inside and outside the EU are increasingly expected to demonstrate sustainable and transparent business practices. This shift creates new opportunities in production countries: 

• suppliers can strengthen their competitive position by improving fair production practices
• trade unions can more effectively advocate against exploitation, and
• governments can use this momentum to strengthen national legislation and attract sustainable investment

Overall, the CSDDD promotes stronger cooperation between European and partner-country stakeholders to help make global trade fairer and greener.

Scope and applicability

From July 2029, the CSDDD will apply to:

• EU companies with more than 5,000 employees and a global net turnover exceeding €1.5 billion
• Non-EU companies generating more than €1.5 billion in turnover within the EU market

These thresholds focus the Directive on major corporations with significant influence over global value chains. Smaller companies in and outside the EU that supply these larger companies will therefore not be subject to direct legal obligations under the Directive, although they may still be indirectly affected by evolving expectations.

Obligations for in-scope companies

This CSDDD establishes a corporate due diligence duty for certain companies. They have a responsibility to identify and address human rights and environmental risks in their global supply chains, following a risk-based approach. This means that companies should, if necessary, prioritise suppliers based on the severity (and, in case of potential impacts, likelihood) of adverse impacts.

Companies within the scope of the CSDDD are required to:

• Integrate due diligence into corporate policies and risk management systems
• Identify and assess actual or potential adverse human rights and environmental risks
• Prevent or mitigate identified adverse impacts and establish remediation processes
• Engage meaningfully with stakeholders, including affected communities and workers' representatives
• Monitor and report on due diligence activities and their effectiveness

These obligations apply to the company's own operations, its subsidiaries, and business relationships across its value chains.

Implications for stakeholders outside the EU

While the CSDDD directly targets large companies, its effects are expected to extend globally:

• Suppliers and producers in non-EU countries may be asked by large business partners in scope of the legislation, to align with their due diligence standards. This could lead to increased scrutiny of practices, requiring stronger adherence to environmental and human rights safeguards. To protect suppliers, the CSDDD also includes measures to support them and limit the risk of in-scope companies shifting compliance burdens onto them.
• Governments and public institutions in production countries can use the CSDDD as an opportunity to strengthen national policy and regulatory frameworks, foster an enabling environment for responsible investment, support local economic development and drive exports and foster trade partnerships.
• Civil society organisations and trade unions can leverage the CSDDD to advocate for improved labour and environmental standards, including by submitting complaints to companies within scope and to competent authorities in EU Member States.

Further information on how the CSDDD may affect different stakeholder groups is available here.

CSDDD: The backbone of the EU sustainability due diligence framework

The CSDDD is part of a broader EU sustainability framework aimed at protecting human rights and the environment, including the Deforestation Regulation or the Forced Labour Regulation. While the CSDDD establishes a general legal framework for sustainability due diligence, these more specific pieces of legislation supersede the Directive’s general requirements in case they establish more extensive or more specific obligations. 

For stakeholders in production countries, strengthening due diligence systems, transparency mechanisms, and institutional capacities therefore helps build the foundations for long-term competitiveness, regulatory readiness, and continued access to the EU market.

Stakeholders are encouraged to familiarise themselves with the Directive's provisions and assess their potential impact.

Link to international standards on corporate sustainability due diligence

The CSDDD is closely aligned with the following international frameworks on corporate sustainability due diligence, specifically:

• The UN Guiding Principles on Business and Human Rights (UNGPs), which define the due diligence concept based on the state duty to protect, corporate responsibility to respect, and access to remedy.
• The OECD Guidelines for Multinational Enterprises in Responsible Business Conduct, which guide companies on their path to identify and address environmental, social and governance risks throughout their operations and global value chains.
• The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, which guide governments, employers and workers on responsible business practices in employment and labour relations.