What is the CSDDD?

Think of the CSDDD as part detective, part watchdog, and part reality check for businesses. It’s an EU law designed to hold companies accountable for their environmental and human rights impact. Unlike its sibling, the CSRD, which focuses on improving sustainability performance through transparency, the CSDDD demands crystal clear action.

At its heart, the CSDDD is all about:

• Promoting responsible business conduct (think less greenwashing, more action).
• Encouraging decisions that don’t just chase profits but also protect people and the planet.
• Creating an EU-wide playbook for sustainability due diligence so everyone’s on the same page.

This directive also dovetails with the European Green Deal, the OECD Guidelines for Responsible Business Conduct, and the UN Guiding principles on Business and Human Rights. Yes, it’s a big deal.

Timeline for implementation

The CSDDD isn’t arriving overnight, but like a well-planned party, it’s got a timeline:

1. February 2022: The proposal hits the EU stage.
2. 2023-2024: The European Parliament and the Council of the EU hash out the details and (hopefully) agree on the final text.
3. 2024-2025: Member States get two years to incorporate the directive into their national laws. Translation: the clock is ticking.
4. 2026 onward: The rules go live—ready or not, businesses need to act.

Pro Tip: Don’t wait for 2026 to act. Get started now and look for alignment with the CSRD activities.

Who needs to comply and what are the timelines?

This directive isn’t for everyone, but it does cast a wide net. Here’s the breakdown:

1. 2027: Companies with >5,000 employees and €1,500M in global revenue
2. 2028: Companies with > 3,000 employees and €900M in global revenue
3. 2029: companies with more than 1,000 employees and €450M in global revenue must comply by 2029.
4. 2030: Non-EU companies with more than €450M EU revenue

SMEs are off the hook (directly), but they’ll likely feel the ripple effects as suppliers to larger companies.

What can you do?

Think of the CSDDD as a corporate reality check. Here’s what companies can do:

1. Spot the Risks: Identify human rights and environmental issues lurking in your value chain (so not only your supply chain). No hiding behind “we didn’t know.”
2. Get the Board Involved: Make sure sustainability is on the agenda at the highest level. No more “optional” side projects.
3. Take Action: Roll out policies to prevent and fix these problems. This isn’t just about ticking boxes – it’s about real impact.
4. Hear the Grievances: Set up ways for affected people to raise concerns. Yes, this includes hearing the uncomfortable truths.
5. Report Like a Pro: Publish transparent updates on your progress. Bonus points if you can do it without putting readers to sleep.

Key challenges and opportunities

Challenges:

• Clarity on the CSDDD and how far into the value chain to look.
• Untangling your supply chain (hint: it’s messier than you think), including the lack of resources and capacities that suppliers may have.
• Budgeting for new processes and juggling compliance across different jurisdictions without losing sleep.
• Getting the framework to combine human rights and environmental topics in your supply chain.

Opportunities:

• Becoming a transparency hero and earning stakeholder trust.
• Standing out from competitors as a sustainability leader.
• Driving innovation while showing the world you mean business.

Conclusion: a strategic chance to lead

The CSDDD isn’t just another regulation, as it demands clear actions – it’s a chance to transform how companies think about their responsibilities to people and the planet. Sure, there are challenges, but there’s also a huge opportunity to lead by example and build a more sustainable future.

Want to know more about the required actions? Keep orbiting this space in the coming weeks, as additional insights will take off soon.