The CSDDD is a European law requiring companies to mitigate their adverse impacts on the environment and human rights. In December 2025, the EU agreed to an Omnibus package amending its sustainability laws, including the CSDDD. The agreement substantially reduces the scope of the law, simplifies its requirements, and gives companies more time to prepare for reporting. The revised rule now applies only to corporations with more than 5,000 employees and a net annual turnover of €1.5B EUR. Notably, it removes climate transition plan requirements. It also delays reporting deadlines to July 2029.
The , which entered into force in 2024, was a capstone piece of a package of sustainability laws passed as part of the . The policy requires companies to assess their adverse environmental and human rights effects and take proactive steps to mitigate harm. While the EU¡¯s recent sustainability Omnibus agreement scales back the scope and reach of the CSDDD, the policy will continue to have an impact on companies inside and outside Europe.?
In this article, we¡¯ll provide an overview of the updated CSDDD: What¡¯s required, who must comply, and how businesses can begin to respond.?
What is the CSDDD??
The CSDDD establishes environmental and human rights obligations for companies.?
With the adoption of the CSDDD, companies operating in Europe will, for the first time, be legally required to meet due diligence obligations on environmental and human rights issues. The CSDDD goes further than other climate and sustainability disclosure regulations like the Corporate Sustainability Reporting Directive (CSRD). It obligates companies not just to identify and report on impacts, but to take action to prevent, mitigate, or put an end to the harms.??
Reporting companies could be liable at the national level for failure to comply with the CSDDD and face fines of up to 3% of their net global turnover.
Who needs to comply with the CSDDD, and when??
The EU's 2025 Omnibus agreement reduced the scope of the law.?
In December 2025, the EU reached an that substantially changed the scope of the CSDDD. The revised rules, which entered into force in March 2026, apply only to large EU corporations with more than 5,000 employees and a net annual turnover of €1.5B, and non-EU corporations with the same turnover. The new agreement postpones CSDDD¡¯s transposition deadline by a year, to July 26, 2028, and in-scope companies now have until July 2029 to begin reporting.
The original rules had a much lower threshold, applying a phased-in reporting schedule starting in 2027 for companies with 1,000-5,000 employees and €450M-€1,500M in global revenue.?
The Omnibus agreement also reduces impacts on value chain partners by limiting information requests. Companies reporting on risks in their value chains have been directed to only ask for information from smaller business partners (those with fewer than 5,000 employees) when information for assessment can¡¯t be found another way.
CSDDD requirements: What will companies need to address?
Due diligence and value chain impacts are part of the law, but climate transition plans are no longer required.
European lawmakers enacted the CSDDD to encourage sustainable and responsible corporate behavior. Under the law, organizations must identify potential environmental and social harm from their operations and value chains. While the original law required entities to provide climate transition plans outlining how they would reduce greenhouse gases, the December 2025 revisions (though legal challenges could reverse that, and companies that are also in-scope of the CSRD may still have to provide climate transition plans).?
Due diligence and value chain impacts
Organizations affected by the CSDDD must identify actual or potential adverse human rights and environmental impacts ¡ª from child labor to deforestation and carbon emissions. They must also describe the actions they will take to mitigate these problems. The due diligence requirements are based on the , which reporting organizations should get to know.?
When it¡¯s not reasonable to address all identified risks at the same time, companies are required to prioritize based on likelihood and severity. One of the significant features of the CSDDD is that it requires companies not just to address harm from their own operations, but from their value chains as well. They will have to integrate human rights and environmental due diligence into their policies, publicly communicate these policies, establish complaint mechanisms, and monitor the effectiveness of their policies over time. Ultimately, companies are obligated to bring an end to any environmental and social harm they cause.?
Under the revised rule, reporting organizations have the flexibility to focus on impacts that involve their direct business partners. Companies no longer have to conduct comprehensive mapping exercises as part of their due diligence, but can base their assessments on reasonably available information. This update is intended to reduce the impacts of information requests on small business partners.?
Another key change is the removal of a mandate to terminate business relationships in cases of severe abuse. The CSDDD will no longer obligate companies to terminate relationships as a last resort, but instead requires them to suspend the relationship with respect to the activities of concern, while continuing to work with the supplier on improvements.
Six Steps for CSDDD Due Diligence
- Identify potential impacts
- Assess high-risk areas
- Mitigate or prevent impacts
- Track the effectiveness of mitigation measures
- Communicate findings
- Remediate impacts
FAQs
CSDDD vs. CSRD:?What's the difference?
The two sustainability laws are distinct but complementary.
The CSDDD and the CSRD are separate policies that work together to uphold more rigorous and comprehensive sustainability standards for companies doing business in the EU.?
The CSRD focuses on expanding transparency and spurs companies to publicly disclose their environmental and social impacts, while the CSDDD focuses on actively managing and mitigating those impacts.
What are the penalties for non-compliance?
Companies can face fines and civil liability.?
Under the revised rule, EU member states can fine companies up to 3% of their global net turnover for failure to adequately comply with the law. Originally, the rule allowed member states to fine up to 5% of global turnover.
Is the CSDDD all about reporting??
CSDDD requires action to address adverse impacts.
Unlike the Corporate Sustainability Reporting Directive (CSRD), which focuses on ESG transparency, the CSDDD calls on organizations to identify adverse impacts ¡ª and take action to address them. It follows a due diligence process based on the .
Getting ready for the CSDDD?
Understand the law, prioritize risks, engage stakeholders, and establish data systems.
Preparing for compliance with the CSDDD will take time. Incorporating due diligence into your business strategy requires company-wide planning. To get started, organizations can focus on these steps:?
- Understand the requirements. Teams responding to the CSDDD should get to know each component of the law, including the following six steps for meeting the due diligence requirement: 1) Identify; 2) Assess; 3) Mitigate; 4) Track; 5) Communicate; 6) Remediate. You¡¯ll need to become very familiar with the text of the final law and engage your legal team to ensure that your response plan is adequate.?
- Prioritize efforts by identifying and assessing risks based on severity and likelihood. Businesses will likely find it difficult to simultaneously address all of the human rights and environmental risks they face. Because of this, it¡¯s important to spend time prioritizing. You should assess each risk, tackling those that are most imminent and severe first. In climate planning, for example, companies are often encouraged to first identify emission ¡°hotspots¡± ¡ª heavy sources of greenhouse gases where decarbonizing can make the biggest difference.?
- Engage in stakeholder consultation throughout the process. Companies will need to work closely with their value chain partners to gather information, identify solutions, and spur action to mitigate environmental and social impacts. It will also be important to cultivate buy-in internally ¡ª many different functions will be involved in reporting and planning, and everyone in the organization needs to thoroughly understand the risks that arise from non-compliance.?
- Establish reliable systems for data collection early on. Though reporting doesn¡¯t kick in until 2029, collecting data can be resource and time-intensive. It¡¯s likely that companies reporting under CSDDD will also have to comply with laws like CSRD, and transparent, accurate carbon data is key. Those who begin this process now will find the road to compliance much smoother ¡ª and will be able to identify opportunities for mitigation sooner.?
A catalyst for global change
Though the scope of the CSDDD has changed, the fact remains that businesses now face legal liability in Europe for their environmental and human rights impacts. This development could have a ripple effect on value chains worldwide. If your organization is in scope under the law, you¡¯ll need substantial time and resources to prepare ¡ª getting started now will set you up for a smooth road ahead.?
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Find out how ˽·¿¾ãÀÖ²¿ can help you prepare for the climate requirements of the CSDDD.?
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