Corporate Sus­tain­abil­i­ty Due Diligence Directive (CSDDD)

Date of Adoption:
13-Jun-24

Omnibus Packages
On 26 February 2025, the European Commission adopted the Omnibus packages, targeting the CSDDD, CSRD, Taxonomy, and CBAM, with a focus on reducing the complexity of EU requirements for all businesses, especially SMEs and small mid-caps (SMCs).

Key changes expected for this regulation (CSDDD):

• More time to prepare:
  The start of the directive is postponed by one year. The first rules for large companies will now apply in July 2028, and EU guidelines will be issued earlier (by July 2026) to help companies prepare.
• Lighter checks on indirect partners:
  Companies will no longer need to systematically assess indirect business partners in complex supply chains. Full checks are required only if there are clear signs of possible harm.
• Simplified due diligence process:
  The frequency of regular reviews will change from every year to every five years. Other obligations, like stakeholder engagement and terminating business relationships, have been relaxed or removed.
• Limited requests to small suppliers:
  Large companies can only ask SMEs and small mid-caps for sustainability information included in the VSME standard, unless extra data is essential and cannot be obtained otherwise.
• No EU-wide liability rules:
  The EU has removed harmonised civil liability conditions. Each country will now decide how companies can be held responsible, including for harm that happens outside the EU.

Scope of application

EU Companies

Large EU limited liability companies & partnerships:

• More than 1,000 employees on average and
• Net worldwide turnover > EUR 450 million in the last financial year.

It also applies to the ultimate parent company of a group that reaches those thresholds.

Non-EU Companies (third-country companies)

Companies formed outside the EU if they generated in the EU:

• Net turnover > EUR 450 million in the previous financial year, or
• are the ultimate parent of a group reaching that threshold.

The CSDDD also covers companies or groups with licensing or franchising agreements exceeding €22.5 million annually, provided their total turnover is over €80 million - globally for EU firms, and within the EU for non-EU firms.