Procurement Glossary
Corporate Sustainability Due Diligence Directive (CSDDD): EU directive for sustainable due diligence obligations
November 19, 2025
The Corporate Sustainability Due Diligence Directive (CSDDD) is a groundbreaking EU directive that obliges companies to carry out comprehensive due diligence in their supply chains. It aims to ensure human rights and environmental standards along the entire value chain and therefore places new demands on procurement. Find out below what the CSDDD covers, what obligations it entails for buyers and how you can successfully implement the compliance requirements.
Key Facts
- EU-wide directive on the enforcement of human rights and environmental standards in supply chains
- Concerns companies with 500 employees and 150 million euros turnover or more as well as smaller companies in risk sectors
- Committed to systematic risk identification, preventive measures and regular monitoring
- Introduction of liability regulations for damage caused by breaches of duty of care
- National implementation by 2026 with gradual application from 2027
Contents
What is the Corporate Sustainability Due Diligence Directive (CSDDD)?
The CSDDD establishes a uniform European legal framework for corporate due diligence obligations in the area of sustainability.
Core elements of the CSDDD
The directive includes systematic requirements for identifying, assessing and mitigating sustainability risks. Companies must check their entire value chain for human rights violations and environmental damage.
- Risk analysis and assessment in the supply chain
- Implementation of preventive and remedial measures
- Continuous monitoring and reporting
- Complaints mechanisms for those affected
CSDDD vs. the German Supply Chain Due Diligence Act
While the German Supply Chain Due Diligence Act already creates national regulations, the CSDDD goes further. It extends the scope of application to smaller companies and introduces civil liability.
Importance of CSDDD in Procurement
For purchasing organizations, the CSDDD means a fundamental reorientation of supplier evaluation. Due diligence processes must be systematically expanded and integrated into all procurement decisions.
Implementation, obligations and evidence
The practical implementation of the CSDDD requires structured processes and clear responsibilities in the procurement organization.
Systematic risk identification
Companies must systematically analyze their supply chains for sustainability risks. This includes the assessment of direct and indirect business partners and their upstream stages of the value chain.
- Mapping the entire supply chain
- Country-specific risk assessment
- Industry-specific risk analysis
Preventive and remedial measures
Once risks have been identified, appropriate risk mitigation measures must be implemented. The Supplier Code of Conduct becomes the central control instrument.
Documentation and verification
The CSDDD requires comprehensive documentation of all due diligence measures. Compliance systems must be expanded accordingly in order to provide the necessary evidence.
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Compliance KPIs & evidence of CSDDD
Effective CSDDD compliance requires measurable key figures and systematic verification.
Supply chain coverage and transparency
The degree of supply chain coverage is a key indicator of CSDDD compliance. Companies must continuously increase the proportion of their assessed suppliers and the depth of their supply chain analysis.
- Percentage of Tier 1 and Tier 2 suppliers assessed
- Coverage of critical Categories
- Completeness of supplier documentation
Risk assessment and effectiveness of measures
The effectiveness of the due diligence measures must be proven by concrete key figures. EcoVadis ratings and similar evaluation systems provide standardized benchmarks.
Incident management and remedial measures
The number of identified risks and the speed with which they are eliminated are important compliance indicators. Systematic complaint management documents the effectiveness of the implemented control systems.
Compliance risks and controls for CSDDD
Non-compliance with the CSDDD entails considerable legal, financial and reputational risks for companies.
Liability risks and sanctions
The directive introduces civil liability for damages caused by breaches of due diligence. Affected parties can claim compensation directly from the company if demonstrable damage has been caused by inadequate due diligence.
Operational compliance challenges
The complex supply chain structure makes it difficult to fully identify risks. Multi-level supply chains in high-risk sectors, where transparency is limited, are particularly critical.
- Incomplete supplier data
- Lack of willingness to cooperate on the part of subcontractors
- Resource-intensive monitoring processes
Reputational and business risks
CSDDD violations can lead to considerable reputational damage. Whistleblower systems increase public awareness of compliance deficits and can jeopardize business relationships.
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Practical example
A German car manufacturer implements CSDDD-compliant due diligence obligations for its battery supply chain. The company first carries out comprehensive supplier mapping and identifies critical raw material sources in the Democratic Republic of Congo. All Tier 1 suppliers are then required to provide detailed evidence of their upstream procurement sources. A digital monitoring system continuously monitors risk indicators and triggers automatic review processes in the event of anomalies.
- Complete mapping of the battery supply chain down to raw material level
- Implementation of a digital compliance dashboard
- Establishment of regular supplier audits in high-risk regions
Current developments and effects
CSDDD implementation is characterized by technological innovations and changing stakeholder expectations.
Digitization of due diligence obligations
Artificial intelligence is revolutionizing supply chain monitoring through automated risk detection and continuous monitoring. AI-based systems can analyze large amounts of data and identify risk indicators in real time.
Tightening of enforcement mechanisms
National supervisory authorities are developing increasingly strict control mechanisms. The scope of fines is being extended considerably, making ESG risk assessments a critical success factor.
Integration in sustainability reporting
CSDDD compliance is increasingly being linked to the Corporate Sustainability Reporting Directive. Companies must communicate their due diligence measures transparently and provide evidence of their effectiveness.
Conclusion
The Corporate Sustainability Due Diligence Directive marks a paradigm shift in European corporate responsibility and presents purchasing organizations with fundamental challenges. Successful implementation requires systematic processes, digital support and close integration into strategic procurement planning. Companies that invest in robust compliance systems at an early stage can achieve competitive advantages and minimize legal risks at the same time. The CSDDD will have a lasting impact on supply chain design and become a key success factor for sustainable business.
FAQ
Which companies are affected by the CSDDD?
The CSDDD applies to EU companies with more than 500 employees and an annual turnover of 150 million euros. Smaller companies in high-risk sectors such as textiles, agriculture or mining are already covered from 250 employees and 40 million euros in turnover. Third-country companies with corresponding EU turnover are also subject to the directive.
How does the CSDDD differ from the German LkSG?
The CSDDD goes beyond the German Supply Chain Due Diligence Act by introducing civil liability and extending the scope of application to smaller companies. In addition, the due diligence obligations are defined more comprehensively and also include climate protection measures in accordance with the Paris Climate Agreement.
What are the sanctions for CSDD violations?
In addition to fines of up to 5% of annual global turnover, companies can be held liable for damages under civil law. Exclusion from public contracts is also possible. Enforcement is carried out by national supervisory authorities with extended control powers.
How can compliance implementation be digitized?
Modern compliance systems use AI-based risk analyses, automated supplier assessments and blockchain technology for traceability. Digital platforms enable real-time monitoring and significantly simplify the required documentation.
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