Corporate Sustainability Due Diligence Directive (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) is an EU directive that requires large companies to identify, prevent, mitigate and remedy adverse impacts on human rights and the environment connected to their own operations, those of their subsidiaries and their chains of activities. It moves beyond mere disclosure: companies must take concrete action, not only report.

The directive was formally adopted as Directive (EU) 2024/1760 in 2024. In 2026 it was substantially simplified by the EU's first Omnibus package, Directive (EU) 2026/470 (published in the Official Journal on 26 February 2026), which narrowed its scope, delayed its application and removed several of the most contested obligations.

Who does the CSDDD apply to?

After the 2026 Omnibus revision, the scope is considerably narrower than in the original 2024 text. The directive applies to:

• EU companies with more than 5,000 employees on average and a net worldwide turnover above 1,500 million euros (the original 2024 thresholds were 1,000 employees and 450 million euros).
• Non-EU companies that generate a comparable net turnover within the European Union.

Smaller companies are not directly in scope, although they can still be affected indirectly as suppliers of larger firms. To limit this trickle-down effect, the revised directive restricts the information that in-scope companies may request from smaller business partners.

What does due diligence involve?

The CSDDD builds on internationally recognised frameworks such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Core obligations include:

• Identifying risks: assessing actual and potential adverse impacts on human rights (forced labour, child labour, unsafe working conditions) and the environment (pollution, biodiversity loss, ecosystem degradation).
• Preventing and mitigating: integrating due diligence into company policies and taking appropriate measures to address identified impacts.
• Bringing impacts to an end: stopping or minimising actual adverse impacts and, where relevant, providing remediation.
• Complaints mechanisms: enabling affected stakeholders, trade unions and civil society to raise concerns.
• Monitoring and communication: tracking the effectiveness of measures and reporting publicly on them.

What the 2026 Omnibus changed

The Omnibus I package made the directive markedly lighter:

• Raised the entry thresholds to 5,000 employees and 1,500 million euros in turnover, sharply reducing the number of companies in scope.
• Removed the obligation to adopt and put into effect a climate transition plan (companies must still draw one up, but the requirement to implement it was dropped).
• Deleted the EU-wide civil liability regime, leaving liability to be governed by each Member State's national law.
• Capped financial penalties at a maximum of 3% of net worldwide turnover.
• Postponed the timeline: Member States must transpose the amended rules by 26 July 2028 and apply them from 26 July 2029, with the first reporting obligations for financial years starting on or after 1 January 2030.

Relationship with other EU rules

The CSDDD complements the disclosure focus of the Corporate Sustainability Reporting Directive (CSRD) by adding obligations to act, not just to report. It connects with the European Green Deal, the SFDR for financial market participants, and the broader body of European Sustainability Reporting Standards (ESRS). It also overlaps with ESG due diligence requirements already used by many investors.

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