Corporate Sustainability Due Diligence Directive
The CSDDD requires large companies to conduct human rights and environmental due diligence along their chain of activities and to adopt a climate transition plan.
The Corporate Sustainability Due Diligence Directive (CSDDD), known in German as the EU-Lieferkettenrichtlinie, was published as Directive (EU) 2024/1760 in the Official Journal of the European Union on 5 July 2024. It obliges in-scope companies to identify, prevent, mitigate, bring to an end and remediate actual and potential adverse impacts on human rights and the environment in their own operations, in those of their subsidiaries and along their chain of activities. Unlike the voluntary nature of many ESG standards, the CSDDD establishes a binding statutory duty of care backed by civil liability and supervisory enforcement.
The due diligence process follows the risk-based approach of the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights: embedding due diligence in corporate policy and risk management, identifying and assessing impacts, taking appropriate prevention and remediation measures, establishing a complaints procedure, monitoring effectiveness and communicating publicly. In-scope companies must additionally adopt a climate change transition plan that is aligned with limiting global warming to 1.5 degrees Celsius and consistent with the requirements of the CSRD.
The scope was originally set for EU companies with more than 1,000 employees and more than EUR 450 million in worldwide net turnover, with staggered application dates from 2027. Under the so-called Omnibus package (European Commission proposals of 26 February 2025) the first application phase was postponed to 26 July 2028 and a substantive revision was initiated, for example limiting due diligence to direct business partners (Tier 1). In Germany the Supply Chain Due Diligence Act (LkSG) is already in force; it will be amended when the CSDDD is transposed, so companies should align their existing processes with the European requirements early.
Legal Basis
Directive (EU) 2024/1760 (CSDDD); national: German Supply Chain Due Diligence Act (LkSG); amendments via the 2025 Omnibus package
Practical Example
A compliance officer at a machinery group with 2,500 employees draws up a risk heat map of the chain of activities and identifies an elevated risk of forced labour and water pollution in the sourcing of electronic components. She embeds the duty of care in a policy statement, agrees contractual assurances and audit rights with the affected suppliers, sets up an anonymous complaints channel and documents prevention and remediation measures. In parallel she aligns the CSDDD transition plan with CSRD reporting so that climate targets and due diligence obligations are communicated consistently to the outside world.