Skip to content
CSDDD
CSDDD Timeline

Understanding the Corporate Sustainability Due Diligence Directive

The CSDDD is a legal framework that mandates responsible supply chain management. Unlike voluntary guidelines, this directive sets clear rules on what companies must do to ensure they uphold human rights, labor rights, and environmental standards throughout their supply chains. The CSDDD requires companies to assess both the positive and negative impacts of their business activities. If negative impacts are identified, they must be addressed and resolved as quickly as possible. This directive builds on principles from the UN Global Compact and the OECD, focusing on corporate responsibility. However, unlike previous frameworks, the CSDDD imposes legal obligations, meaning companies can face legal consequences if they fail to ensure compliance with these standards, such as respecting human rights within their supply chains. It marks a shift from expecting companies to act responsibly to implementing real requirements.
Risk Assessment
 
A key aspect of the CSDDD is handling detailed risk analyses of supply chains to identify potential issues, ensuring that companies are proactive in preventing harm. The complexity of overseeing the supply chain may lead to simpler supply chains as businesses work to ensure compliance.

To support companies in fulfilling their due diligence obligations, the process can be broken down into six structured steps. These steps guide businesses through embedding responsibility, identifying and addressing risks, monitoring progress, and maintaining transparent communication. 
CSDDD risk assesment

Does the Corporate Sustainability Due Diligence Directive affect your company?

Although the CSDDD primarily applies to large companies with a significant size it’s essential for smaller companies to understand how it may indirectly impact them. The following sections provide guidance for companies that do not fall under the immediate compliance obligations but may still be affected through their roles in supply chains or by preparing for future regulatory developments. Proactive steps are recommended to stay ahead and align with evolving expectations.

The CSDDD requires companies to conduct due diligence on their supply chains, identifying risks related to human rights violations and environmental impacts. Although your business may not be directly affected yet, larger companies that you work with might require detailed information to meet their own compliance needs, which could include requests for evidence of due diligence on your part.

CSDDD the trickle down effect

How to work with the Corporate Sustainability Due Diligence Directive?

If you don’t have to report?

 

To work effectively with the CSDDD, you need to take several important steps. It begins with handling due diligence to identify and address potential risks in both your own operations and your supply chain, focusing on critical areas like human rights, labor rights, and environmental impact. It's crucial to go beyond simply obtaining signed compliance documents from suppliers. Instead, take a deeper look into the actual practices and risks within your supply chain. Once risks are identified, proactive measures should be taken to reduce them, ensuring your business and partners are not involved in harmful practices. By integrating due diligence practices into your operations early, you’ll be better prepared to meet any future obligations under the CSDDD.

If you’re already aligned with the UN Global Compact or OECD guidelines, you’re on the right track, but further preparation can ensure you're ready for any requirements that might come your way. 

 

How is the Corporate Sustainability Due Diligence Directive connected to other initiatives, regulations and laws?

EU Taxonomy, CSRD and CSDDD

The CSDDD is closely tied to the Corporate Sustainability Reporting Directive (CSRD). While the CSRD requires companies to report on their sustainability practices, the CSDDD mandates active management of their impacts on human rights and the environment. CSRD reporting will include disclosures on actions taken under the CSDDD, ensuring transparency about how companies are addressing sustainability risks and opportunities.

The CSDDD is also linked to the EU Taxonomy for Sustainable Activities. While the EU Taxonomy defines what qualifies as a sustainable economic activity, the CSDDD requires companies to manage and minimize their impacts on human rights and the environment. The CSDDD sets minimum safeguards for compliance under the EU Taxonomy, ensuring that sustainable activities are conducted responsibly and ethically.