The EU’s Corporate Sustainability Due Diligence Directive (CSDDD), Explained
Omnibus cut CSDDD’s scope by 70%, to about 1,447 corporate groups. Here is what the human rights due diligence directive actually requires now.
The Corporate Sustainability Due Diligence Directive (Directive (EU) 2024/1760, commonly abbreviated CSDDD) requires large companies to identify and address actual and potential adverse human rights and environmental impacts across their own operations, their subsidiaries, and their chains of activities. The directive entered into force on July 25, 2024, but its scope and several core obligations were substantially narrowed by the EU’s Omnibus I simplification package, whose amendments to CSDDD were published in the Official Journal on February 26, 2026, and entered into force on March 18, 2026.
What CSDDD requires
Covered companies must operate a due diligence process across their value chain: identifying human rights and environmental risks — such as forced labor, unsafe working conditions, or pollution — in their own operations and those of business partners, taking steps to prevent or mitigate identified risks, establishing a complaints and monitoring mechanism, and publicly communicating on their due diligence efforts. The directive originally also required companies to adopt and implement a climate transition plan aligned with limiting global warming to 1.5°C, mirroring language used in the EU’s Corporate Sustainability Reporting Directive (CSRD).
How the scope has changed since 2024
As adopted in 2024, CSDDD phased in three sets of thresholds. From July 26, 2027, it was to apply to companies with more than 5,000 employees and more than €1.5 billion in net worldwide turnover. From July 26, 2028, the threshold was to drop to more than 3,000 employees and more than €900 million in turnover. From July 26, 2029, it was to drop further, to more than 1,000 employees and more than €450 million in turnover — bringing a substantially larger set of mid-sized companies into scope.
The Omnibus I amendments eliminated the two lower phase-in tiers, leaving only the largest-company threshold — more than 5,000 employees and more than €1.5 billion in turnover — as CSDDD’s sole scope criterion. According to analysis cited by the Business & Human Rights Resource Centre, this reduced the number of covered corporate groups by approximately 70%, from about 3,400 to approximately 1,447 globally, of which roughly one-third are headquartered outside the EU.
What else Omnibus removed
Beyond narrowing the company-size thresholds, the amended directive deleted the harmonized EU-wide civil liability standard that the original 2024 text had established, under which affected persons had a defined right to full compensation through a common EU framework; liability questions now revert to national legal frameworks, which vary by member state. The amendments also removed the mandatory requirement to adopt a climate transition plan, though the risk-based due diligence obligation across the full supply chain — rather than a narrower focus limited to direct, tier-one suppliers — was retained.
Revised timeline
Member states must transpose the amended directive into national law by July 26, 2028, an extension from the original July 26, 2027 transposition deadline. Substantive implementation is now required from July 26, 2029, except for the directive’s Article 16 reporting obligations, which apply from financial years starting on or after January 1, 2030. The European Commission has scheduled implementation guidance for July 26, 2027, with further guidance to follow by July 26, 2028.
How CSDDD relates to the OECD’s existing due diligence standard
CSDDD’s due-diligence obligations closely follow a framework that predates the directive: the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, a voluntary standard governments have promoted since 1976 and most recently updated in 2023, which already asked multinational companies to identify, prevent, and account for adverse human rights and environmental impacts across their operations and value chains. CSDDD’s contribution is converting a comparable due-diligence expectation from a voluntary OECD standard, without an enforcement mechanism, into a binding EU legal obligation with the compliance and transposition deadlines described above.
What remains unresolved
Because national transposition is not due until 2028, individual member states have not yet finalized how they will implement the amended directive domestically, including whether any will retain elements of the original civil liability standard or climate transition plan requirement in national law beyond the EU floor. How the reduced 1,447-company scope will affect due diligence expectations placed indirectly on smaller suppliers — who are not directly covered by CSDDD but may still face due diligence questions from covered customers — is also not yet settled in official guidance.
Sources: Corporate Sustainability Due Diligence Directive, Business & Human Rights Resource Centre, OECD Guidelines for Multinational Enterprises on Responsible Business Conduct
Featured image: photo by EqualStock IN on Pexels (free Pexels license).
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I specialize in sustainability education, curriculum co-creation, and early-stage project strategy. At WINSS, I craft articles on sustainability, transformative AI, and related topics. When I’m not writing, you’ll find me chasing the perfect sushi roll, exploring cities around the globe, or unwinding with my dog Puffy — the world’s most loyal sidekick.
