Corporate Sustainability Due Diligence Directive (CSDDD) – A new era of corporate accountability

Learn how the Corporate Sustainability Due Diligence Directive (CSDDD) impacts EU and non-EU companies. Discover due diligence requirements, legal risks, and how FirmC helps you navigate compliance.

What is the Corporate Sustainability Due Diligence Directive (CSDDD)?

The Corporate Sustainability Due Diligence Directive (CSDDD) is a landmark legislative proposal by the European Union, aimed at embedding responsible business conduct into corporate operations and global value chains. It sets out mandatory due diligence obligations for companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts.

Unlike voluntary ESG frameworks or reporting initiatives, the CSDDD introduces legal accountability for environmental harm and human rights abuses across a company’s own operations, subsidiaries, and supply chain.

Also referred to as the EU due diligence directive, the CSDDD marks a fundamental shift: from reactive reporting to proactive responsibility.

Why does the CSDDD matter?

This directive addresses growing global concern around corporate complicity in:

• Labour exploitation and unsafe working conditions
• Child labour and forced labour
• Environmental degradation and climate impacts

With mounting pressure from stakeholders, consumers, and policymakers, the CSDDD introduces enforceable standards that ensure businesses operating in or with the EU act responsibly across borders.

Who does the CSDDD apply to?

The scope of the directive includes:

• EU-based companies with more than 500 employees and €150 million in net turnover worldwide
• Companies in high-impact sectors (e.g. textiles, mining, agriculture) with more than 250 employees and €40 million turnover
• Non-EU companies that generate significant turnover (€150 million) in the EU market

This means that both EU-headquartered multinationals and non-EU suppliers in global value chains will need to comply.

What are the CSDDD requirements?

Companies falling within scope must:

• Integrate due diligence into all policies and risk management systems
• Identify and assess actual and potential adverse impacts on human rights and the environment
• Prevent or mitigate risks through contractual clauses and action plans
• Establish a complaints mechanism for affected stakeholders
• Publicly communicate on due diligence policies and outcomes

One of the most significant legal innovations of the CSDDD is the introduction of civil liability. Companies could be held liable and required to compensate victims of harm if they fail to prevent damage through appropriate due diligence.

CSDDD timeline – when will it apply?

As of early 2025, the CSDDD is expected to be formally adopted and transposed into national law. Implementation will likely follow a phased approach:

• 2025–2026: Application to large companies
• 2027 onwards: Extension to high-risk sectors and non-EU entities

Companies should act now to prepare, as internal systems, supply chain mapping, and stakeholder engagement take time to build and embed.

CSDDD vs CSRD – what’s the difference?

Although both directives fall under the EU’s sustainable corporate governance agenda, their focus is different:

• The Corporate Sustainability Reporting Directive > linken zodra live (CSRD) is about disclosing sustainability information
• The Corporate Sustainability Due Diligence Directive (CSDDD) is about managing and preventing sustainability-related risks through direct actions

Think of CSRD as “what you report” and CSDDD as “what you do.” Compliance with both

How FirmC helps businesses prepare for the CSDDD

At FirmC, we support businesses in building robust and practical due diligence systems. Our services include:

• CSDDD readiness assessments
• Value chain mapping and risk prioritisation
• Stakeholder engagement strategies
• Policy drafting and contractual integration
• Training for legal, procurement and compliance teams

We also advise on how CSDDD aligns with international frameworks like the UNGPs and OECD Guidelines. Our multidisciplinary team of legal, ESG, and compliance experts ensures your business stays ahead of regulation while creating real-world impact.

Ready to prepare for CSDDD?

Get in touch with FirmC and take the first step toward sustainable due diligence.
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