What is the CSDDD?

Quick Answer: The Corporate Sustainability Due Diligence Directive (CSDDD) is an EU law that requires the largest companies to identify, prevent, and address negative impacts on human rights and the environment across their operations and supply chains. It goes beyond reporting obligations by placing a legal duty of action on businesses, not just disclosure. Following the EU's Omnibus I reform in 2026, its scope has narrowed considerably, and a previously mandatory climate transition plan requirement has been removed.

What Is the CSDDD?

The Corporate Sustainability Due Diligence Directive (CSDDD) is a piece of EU legislation, adopted as Directive (EU) 2024/1760, that holds large companies legally accountable for human rights and environmental harm in their business operations, subsidiaries, and value chains. Where other EU sustainability regulations focus on what companies disclose, the CSDDD focuses on what companies must actually do.

The European Parliament formally adopted the directive in April 2024 and it entered into force in July 2024. The directive has since been substantially amended by the Omnibus I Directive (EU) 2026/470, which entered into force on 18 March 2026 and narrowed its scope, softened several obligations, and reset key implementation dates.

Who Does the CSDDD Apply To?

Following the Omnibus I amendments, the CSDDD applies to a much smaller population of companies than originally envisaged. The current thresholds are:

• EU companies with more than 5,000 employees and a net worldwide turnover above €1.5 billion
• Non-EU companies generating more than €1.5 billion net turnover in the EU, with no separate employee threshold

This is a substantial increase from the original 2024 thresholds of 1,000 employees and €450 million turnover, and narrows the directly regulated population from an estimated 13,000 companies to around 6,000. The original text's lower thresholds for specific high-risk sectors, including textiles, agriculture, and extractive industries, were removed even before this change, during the 2024 negotiations, applying a single threshold across sectors.

Small and medium-sized enterprises (SMEs) remain outside direct scope, and now sit further outside it than before given the higher thresholds. However, they will still feel the directive's effects indirectly. Large companies subject to the CSDDD need information and assurances from their suppliers, which means SMEs in those supply chains continue to face pressure to demonstrate responsible practices, even as fewer large companies are themselves obligated to ask.

What Does the CSDDD Require Companies to Do?

The CSDDD establishes a structured due diligence process. Companies in scope must:

• Map and assess actual and potential adverse impacts on human rights and the environment across their own operations, subsidiaries, and direct business relationships
• Prevent or mitigate potential impacts before they occur
• Bring to an end or minimise actual adverse impacts where they are already happening
• Establish a complaints mechanism so affected individuals and organisations can raise concerns
• Monitor the effectiveness of their due diligence measures on an ongoing basis
• Communicate publicly on their due diligence approach and outcomes

Under Omnibus I, the scope of this mapping exercise was also narrowed. The original standard required assessment across a company's full chain of "established business relationships." The revised approach focuses primarily on direct (tier-1) business partners, extending further down the value chain only where a company has plausible information indicating a risk, rather than requiring comprehensive mapping by default.

One requirement was removed entirely rather than narrowed: the obligation to adopt a climate transition plan aligned with 1.5°C. This previously sat within the CSDDD as a legal, conduct-level obligation. Under Omnibus I, it has been deleted from the directive. Companies that are separately in scope of the CSRD still need to disclose a transition plan under ESRS E1, but that sits within the reporting framework, not as a standalone CSDDD legal duty.

How Does the CSDDD Relate to the CSRD?

The CSDDD and the Corporate Sustainability Reporting Directive (CSRD) are separate but closely connected pieces of EU legislation, and both were significantly narrowed by the same Omnibus I reform. Understanding the distinction matters for anyone responsible for sustainability compliance.

CSRD requires companies to disclose information about their sustainability risks, impacts, and due diligence processes. It is primarily a reporting obligation, governed by the European Sustainability Reporting Standards (ESRS), and now applies to companies with more than 1,000 employees and more than €450 million turnover.

CSDDD requires companies to conduct due diligence and take corrective action. It is a conduct obligation, and now applies only to the much smaller population of companies described above, more than 5,000 employees and €1.5 billion turnover.

In practice, the two directives still reinforce each other for the companies that remain in scope of both. The due diligence processes a company builds to comply with the CSDDD generate much of the data needed for CSRD disclosures. Companies that have already started carbon accounting and sustainability reporting under CSRD will find that work feeds directly into CSDDD compliance, particularly around supply chain emissions.

Why Does the CSDDD Matter for Companies Outside the EU?

The CSDDD has a reach that extends well beyond European borders, though that reach has narrowed alongside the scope changes above. Any non-EU company generating more than €1.5 billion in EU turnover falls within scope. Beyond that, the directive creates a cascading effect through global supply chains.

The CSDDD requires in-scope EU companies to conduct due diligence on their direct business relationships, which includes suppliers and business partners outside the EU. This means international suppliers, manufacturers, and service providers can still face requests for data, contractual commitments, and evidence of responsible practices, even if the directive does not directly regulate them, though the narrower value chain scope under Omnibus I means these requests are now more targeted than the original "established business relationships" standard implied.

Non-compliance carries real consequences, though these too have been softened. Member states must designate supervisory authorities with the power to investigate and impose penalties, with maximum fines now capped at 3% of worldwide turnover, down from a previous mandatory minimum of 5%. Civil liability is no longer governed by a single harmonised EU standard; instead, it now follows the law of each Member State, which may lead to variation in how companies can be held liable for harm caused by due diligence failures.

What Does the CSDDD Mean for Carbon Accounting?

For companies already measuring their carbon footprint, the CSDDD's practical relevance to carbon accounting has changed. With the mandatory climate transition plan requirement removed from the directive itself, the legal driver for a documented decarbonisation plan now sits primarily with the CSRD and ESRS E1, for the companies still in scope of that reporting obligation, rather than with CSDDD as a standalone conduct duty.

That doesn't make carbon data irrelevant to CSDDD compliance. Environmental due diligence under the directive still requires companies to identify and address adverse environmental impacts across their operations and direct business relationships, and a credible, full-scope emissions inventory remains one of the clearest ways to demonstrate that assessment has been done properly. A company that can show a full-scope footprint (Scopes 1, 2, and 3) and a clear baseline is in a stronger position to evidence its due diligence process than one working from high-level estimates, even without a mandatory transition plan attached.

Seedling's approach to carbon management, combining GHG Protocol-aligned measurement with a bespoke decarbonisation plan and SBTi-aligned target setting, produces outputs that remain useful for this kind of due diligence evidencing, and for the ESRS E1 transition plan disclosures that CSRD-scope companies still need to produce.

As member states work towards the 26 July 2028 transposition deadline, with company compliance following from 26 July 2029, the population of companies with a direct legal obligation under CSDDD is smaller than originally planned. Companies below the new thresholds that still supply large corporates should expect indirect pressure for data and assurances to continue, even where the direct legal duty no longer applies to them.