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Corporate sustainability due diligence

Fostering sustainable and responsible corporate behaviour for a just transition towards a sustainable economy.

On 25 July 2024, the Directive on corporate sustainability due diligence (Directive 2024/1760) entered into force. It has subsequently been amended by the Omnibus I simplification initiative, including Directive (EU) 2025/794 and Directive (EU) 2026/470. The aim of this Directive is to foster sustainable and responsible corporate behaviour in companies’ operations, those of their subsidiaries, and across their global value chains. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe, while avoiding unnecessary burdens for companies and smaller business partners.

GettyImages/DigitalVision/We Are Stone/Ed Freeman Westend61
GettyImages/DigitalVision/We Are Stone/Ed Freeman Westend61

What are the benefits of these rules?

  • Citizens ilustration
    For citizens
    • Better protection of human rights, including labour rights.
    • Healthier environment for present and future generations, including climate change mitigation.
    • Increased trust in businesses.
    • More transparency enabling informed choices.
    • Better access to justice for victims. 
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    For companies
    • Harmonised legal framework in the EU, creating legal certainty and level playing field.
    • Greater customer trust and employees’ commitment.
    • Better awareness of companies’ negative human rights and environmental impacts, less liability risks.
    • Better risk management, more resilience and increased competitiveness.
    • Increased attractiveness for talent, sustainability-oriented investors and public procurers.
    • Increased incentives for innovation.
    • Better access to finance.
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    For developing countries
    • Better protection of human rights and the environment.
    • Sustainable investment, capacity building and support for value chain companies.
    • Improved sustainability-related practices.
    • Increased take-up of international standards.
    • Improved living conditions for people.

What are the obligations for companies?

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    This Directive establishes a corporate due diligence duty for the very large companies that fall within its scope. Companies must identify and address actual and potential adverse human rights and environmental impacts in their own operations, those of their subsidiaries and in their chains of activities, supported by complaints and notification procedures, monitoring and public communication. Following the Omnibus I amendments, companies may focus on areas where impacts are most likely and most severe, based on reasonably available information.

Which companies will the new EU rules apply to?

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    Companies

    Large EU companies & partnerships: 

    +/- 6,000 companies - at least 5000 employees and EUR 1.5 billion turnover (net) worldwide, including on a consolidated basis for ultimate parent companies of groups.

     

    Large non–EU companies: 

    +/- 900 companies - at least EUR 1.5 billion turnover (net) in EU, including on a consolidated basis for ultimate parent companies of groups.

    Franchising and licensing arrangements may also bring companies or ultimate parent companies of groups into scope where the Directive's royalty and turnover thresholds are met

    The Directive contains provisions to facilitate compliance and limit burdens on companies, both in scope and in the value chain.

     

    SMEs 

    Micro companies and SMEs are not covered by the proposed rules. However, the Directive provides supporting and protective measures for SMEs and SMCs (Small Midcaps Companies) and other smaller business partners that may be indirectly affected in the chains of activities of companies in scope, including limits on information requests, guidance and model contractual clauses.

What are the estimated costs of the new rules for companies?

Companies in scope will have to bear:

  • The costs of establishing and operating the due diligence process.
  • Costs linked to appropriate measures to prevent, mitigate, bring to an end or minimise adverse impacts, where needed. 

How will the new rules be enforced?

The rules on corporate sustainability due diligence will be enforced through:

  • Administrative supervision and civil liability under national law: Member States will designate one or more authorities to supervise and enforce the rules, including through injunctive orders and effective, proportionate and dissuasive penalties (in particular fines). The maximum limit for pecuniary penalties is set at 3% of the company's net worldwide turnover, for the most serious violations. At European level, the Commission will set up a European Network of Supervisory Authorities that will bring together representatives of the national bodies to ensure a coordinated approach. Where a company is held liable under national law for damage caused by a failure to comply with the due diligence requirements, affected persons have a right to full compensation.

Why does the EU need to foster sustainable corporate behaviour?

Image: ©Freepik from www flaticon com | icons of office buildings. 70% of them are colored blue.

The Directive will contribute to the just transition to a sustainable economy, in which businesses play a key role.

A broad range of stakeholder groups, including civil society representatives, EU citizens, businesses as well as business associations, have been calling for mandatory due diligence rules. 70% of the businesses who responded to the public consultation sent a clear message: EU action on corporate sustainability due diligence is needed.

A third of companies recognised the need to act and are taking measures to address adverse effects of their actions on human rights or the environment, but progress is slow and uneven. The increasing complexity and global nature of value chains makes it challenging for companies to get reliable information on business partners’ operations. The fragmentation of national rules on corporate, sustainability-related due diligence obligations further slows down the take-up of good practices. Stand-alone measures by some Member States are not enough to help companies exploit their full potential and act sustainably.

As amended, EU rules will provide a more targeted, uniform legal framework and ensure a level playing field for companies across the EU Single Market. Such rules will also foster international competitiveness, increase innovation and ensure legal certainty for companies addressing sustainability impacts. The Directive will steer businesses towards responsible behaviour, while avoiding unnecessary burdens on companies and smaller business partners, and could become a new global standard with regard to mandatory environmental and human rights due diligence.

What are the next steps?

The Omnibus I simplification package has been adopted. Directive (EU) 2025/794 postponed certain application dates, and Directive (EU) 2026/470 introduced the substantive sustainability reporting and due diligence amendments. Directive (EU) 2026/470 was published in the Official Journal on 26 February 2026 and entered into force on 18 March 2026.

Member States must bring into force the laws, regulations and administrative provisions necessary to comply with the CSDDD-related Omnibus I amendments by 26 July 2028. Under the amended CSDDD, Member States must adopt and publish national transposition measures by 26 July 2028 and apply them from 26 July 2029, except for the Article 16 reporting measures, which apply for financial years starting on or after 1 January 2030.

Commission guidance and voluntary model contractual clauses will help companies conduct due diligence, with the the main guidelines due by 26 July 2027 and additional ones by 26 July 2028.