The CSDDD (Corporate Sustainability Due Diligence Directive) is Directive (EU) 2024/1760 of June 13, 2024 on corporate sustainability due diligence. It entered into force on July 25, 2024 and has been amended twice: in April 2025 by the "stop-the-clock" Directive (EU) 2025/794 and in February 2026 by the omnibus Directive (EU) 2026/470. Legal status of this text: October 7, 2026.
Key takeaways
- After the omnibus amendment, the scope covers EU companies with an average of more than 5,000 employees and more than EUR 1.5 billion in worldwide net turnover (Art. 2(1)(a)), third-country companies with more than EUR 1.5 billion in net turnover in the Union (Art. 2(2)(a)), and franchisors and licensors above their own thresholds (point (c) in each case).
- Member States must transpose the directive by July 26, 2028 and apply it from July 26, 2029 (Art. 37(1)).
- The obligation to adopt a climate change mitigation transition plan (Art. 22) has been deleted.
- Pecuniary penalties now have a cap of 3% of worldwide net turnover; previously the maximum had to be at least 5% (Art. 27(4)).
- In Germany, the Supply Chain Due Diligence Act (LkSG) and its 1,000-employee threshold continue to apply until transposition.
What is the CSDDD?
The CSDDD is an EU directive that requires very large companies to identify, prevent, bring to an end and monitor actual and potential adverse impacts on human rights and the environment, in their own operations, at subsidiaries and at business partners. Other names are EU-Lieferkettenrichtlinie (German) and CS3D. As a directive, it does not apply directly: companies are bound only through the national implementing act.
The chain of activities reaches further than the supply chain
The chain of activities under Art. 3(1)(g) covers upstream activities of business partners (design, extraction, sourcing, manufacture, transport, storage, supply) and the downstream distribution, transport and storage of a product where business partners carry them out for or on behalf of the company. According to the recitals, disposal of the product is not included.
Omnibus 2026: what changed in the CSDDD
Omnibus Directive (EU) 2026/470 of February 24, 2026 sharply narrowed the scope, pushed the deadlines back by another year and softened several obligations. It was published in the Official Journal on February 26, 2026 and entered into force on March 18, 2026.
| Item | Original: Dir. (EU) 2024/1760 | Stop-the-clock: Dir. (EU) 2025/794 | Omnibus: Dir. (EU) 2026/470 |
|---|---|---|---|
| Transposition deadline | July 26, 2026 | July 26, 2027 | July 26, 2028 |
| Application | phased: July 26, 2027 (more than 5,000 employees and EUR 1.5 bn), July 26, 2028 (more than 3,000 and EUR 900 m), July 26, 2029 (all others) | phased: July 26, 2028 (more than 3,000 and EUR 900 m), July 26, 2029 (all others) | single date: July 26, 2029 |
| Thresholds for EU companies | more than 1,000 employees and more than EUR 450 m worldwide net turnover | unchanged | more than 5,000 employees and more than EUR 1.5 bn worldwide net turnover |
| Identifying adverse impacts | identification and assessment across the chain of activities | unchanged | scoping exercise, then in-depth assessment of the areas where impacts are most likely and most severe (Art. 8(2)) |
| Climate transition plan | required under Art. 22 | unchanged | deleted |
| Pecuniary penalties | maximum of at least 5% of worldwide net turnover | unchanged | cap of 3% of worldwide net turnover |
| Civil liability | harmonized liability rule in Art. 29(1) | unchanged | Art. 29(1) deleted; liability under national law |
Further changes: monitoring, statement, harmonization
Monitoring under Art. 15 is now due only after a significant change, whenever there are reasonable grounds, and at least every five years. The annual statement under Art. 16 applies to financial years starting on or after January 1, 2030. Art. 4 extends maximum harmonization to further core obligations, including prioritization, the complaints procedure, monitoring and reporting; on these, Member States may not deviate from the directive.
Who is subject to the CSDDD?
Under Art. 2 as amended by Directive (EU) 2026/470, three groups are subject to the CSDDD:
| Group | Threshold | Provision |
|---|---|---|
| Companies formed under the law of a Member State | in the last financial year, an average of more than 5,000 employees and more than EUR 1.5 bn worldwide net turnover; a corresponding group rule applies to ultimate parent companies | Art. 2(1)(a) and (b) |
| Third-country companies | more than EUR 1.5 bn net turnover in the Union in the financial year preceding the last financial year; there is no employee threshold here | Art. 2(2)(a) |
| Franchisors and licensors | royalties above EUR 75 m and net turnover above EUR 275 m | Art. 2(1)(c) and 2(2)(c) |
Mid-sized companies as business partners
Mid-sized companies are not directly in scope but are affected indirectly as business partners of in-scope customers. Art. 8(2a)(a) limits this trickle-down effect: for the in-depth assessment, in-scope companies may request information only where it is necessary, and from partners with fewer than 5,000 employees only where it cannot reasonably be obtained by other means.
What are the 8 due diligence obligations of the CSDDD?
Under Art. 5(1), CSDDD due diligence consists of eight elements, set out in Art. 7 to 16:
- Integrate due diligence into company policies and risk management systems (Art. 7).
- Identify, assess and, where necessary, prioritize actual and potential adverse impacts (Art. 8 and 9).
- Prevent and mitigate potential impacts, bring actual impacts to an end and minimize their extent (Art. 10 and 11).
- Provide remediation for actual adverse impacts (Art. 12).
- Carry out meaningful engagement with stakeholders (Art. 13).
- Establish and maintain a notification mechanism and complaints procedure (Art. 14).
- Monitor the effectiveness of due diligence policies and measures (Art. 15).
- Communicate publicly on due diligence (Art. 16).
Documentation must be kept for at least five years (Art. 5(4)). Suspending a business relationship is a last resort (Art. 10(6), Art. 11(7)). Where the effects of suspension would be manifestly more severe than the impacts that could not be prevented, the company is not obliged to suspend, but it must be able to justify that decision to the supervisory authority.
CSDDD and LkSG compared
The basic difference: the German Supply Chain Due Diligence Act (LkSG) is law in force today, while the CSDDD takes effect only through a national implementing act. The two are close in substance; thresholds, reach and legal consequences differ.
| Criterion | CSDDD (as amended by 2026/470) | LkSG (text as of October 7, 2026) |
|---|---|---|
| Legal nature | EU directive, transposition by July 26, 2028 | German statute, already in force |
| Threshold | more than 5,000 employees and more than EUR 1.5 bn worldwide net turnover | as a rule at least 1,000 employees in Germany since January 1, 2024, no turnover test (§ 1) |
| Reach | chain of activities: upstream plus certain downstream activities | supply chain; indirect suppliers only on substantiated knowledge (§ 9(3)) |
| Identification | scoping exercise plus in-depth assessment (Art. 8(2)) | risk analysis once a year and on an ad hoc basis (§ 5(4)) |
| Record retention | at least five years (Art. 5(4)) | at least seven years (§ 10(1)) |
| Penalties | cap on pecuniary penalties of 3% of worldwide net turnover (Art. 27(4)) | fines up to EUR 800,000; for certain violations up to 2% of average annual turnover above EUR 400 m (§ 24(2) and (3)) |
| Civil liability | liability under national law; a liable company owes full compensation (Art. 29(2)) | no civil liability arising from the LkSG itself (§ 3(3) sentence 1) |
The LkSG until transposition: status October 2026
The LkSG applies until the legislature amends or replaces it. On October 7, 2026, the consolidated text still contained the reporting obligation in § 10(2) LkSG. Status of the amendment procedure:
| Step | Status |
|---|---|
| Government bill | adopted by the federal cabinet on September 3, 2025, Bundestag printed paper 21/2474 of October 29, 2025; the reporting obligation would be abolished and only serious violations would be sanctioned |
| Bundestag | first reading on January 16, 2026, referred to the lead Committee on Labour and Social Affairs |
| Administrative practice | since fall 2025, BAFA no longer reviews company reports under §§ 12 and 13 LkSG |
The due diligence obligations themselves (risk management, risk analysis, prevention, remediation, complaints procedure and documentation) are unaffected. Art. 1(2) of the directive expressly allows Member States to align existing national due diligence laws, in particular their scope, with the directive. How Germany will use this had not been decided as of October 7, 2026.
Which penalties does the CSDDD set?
For pecuniary penalties, the CSDDD sets a cap of 3% of worldwide net turnover in the financial year preceding the decision (Art. 27(4)). Supervisory authorities designated under Art. 24 impose them. A company that, after justified prioritization, does not address less severe impacts is not penalized for that reason alone (Art. 9(4)). With Art. 29(1) deleted, civil liability follows national law; a liable company owes full compensation without overcompensation (Art. 29(2)).
Preparing for 2029 in 5 steps
Preparation for the CSDDD starts with the scope check and builds on the LkSG process:
- Check whether you are in scope: compare your group's headcount and net turnover with the thresholds in Art. 2. If you are below them, check which of your customers are in scope.
- Keep meeting the LkSG obligations: risk analysis, complaints procedure and documentation remain law, whatever happens to the reporting obligation.
- Map the chain of activities: suppliers and downstream partners for distribution, transport and storage, each with a responsible person and the business processes behind them. An existing supplier evaluation can provide the master data.
- Prepare the scoping exercise: assign risk factors at business-partner, geographic and sector level (Art. 3(1)(u)).
- Track the German implementing act: it is due by July 26, 2028 and decides what applies from July 26, 2029.