Corporate Sustainability Due Diligence Directive (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD) is a European Union law adopted in 2024 that obliges large companies to conduct ongoing human-rights and environmental due diligence across their operations, subsidiaries, and chain of activities. It moves due diligence from voluntary commitment to enforceable legal duty, backed by administrative penalties and civil liability.

How it works

In-scope companies must integrate due diligence into their policies, identify actual and potential adverse impacts, prevent or mitigate them, and remediate harm where it occurs. The directive applies a risk-based, ongoing approach rather than a one-time audit.

• Map the chain of activities, including direct suppliers and, where relevant, indirect ones

• Assess human-rights risks such as forced labor, child labor, and unsafe working conditions

• Assess environmental risks including pollution, biodiversity loss, and water use

• Adopt a climate transition plan aligned with the Paris Agreement 1.5 degrees Celsius target

• Engage stakeholders and provide grievance mechanisms

Why it matters in procurement

Procurement teams sit at the front line of CSDDD compliance because most adverse impacts occur upstream in supplier networks. Sourcing decisions, supplier onboarding, and contractual terms must now incorporate human-rights and environmental clauses. Buyers need defensible records of supplier screening, risk assessments, and corrective actions. Non-compliance exposes the parent company to fines based on global turnover and to civil claims from affected parties.