What Comes Next for CSDDD?

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) was endorsed by the EU Council on May 24, 2024 after a long battle over the scope of the law. The first obligations for companies will start 3 years after the directive enters into force, meaning that starting in the summer of 2027, the first companies will be expected to be compliant with the CSDDD. 

This timeline represents the addition of a phase-in mechanism for CSDDD compliance based on annual net turnover and employee count. The timeline for compliance is as follows:

Companies with:

• 5,000 employees & net turnover of EUR 1.5 billion will have to comply by summer 2027

• 3,000 employees & net turnover of EUR 900 million will have to comply by summer 2028

1,000 employees & net turnover of EUR 450 million will have to comply by summer 2029

Although CSDDD has been formally endorsed by the EU Council, we can expect specifications around implementation through forthcoming delegated acts and guidelines published by the Commission. Here is the expected timeline for the key delegated acts, reports, and guidance: 

• By mid 2026 - At the national level, EU Countries will have to transpose the CSDDD into national law and designate supervisory authorities to supervise compliance with the obligations.

• By mid 2026 - Report on the necessity of laying down additional sustainability due diligence requirements tailored to regulated financial undertakings with respect to the provision of financial services and investment activities

• By mid 2026 - Report on the implementation of this Directive and its effectiveness in reaching its objectives, in particular in addressing adverse impacts.

• By March 31st, 2027 - The Commission is expected to lay down the content and criteria for the reporting under Article 16, specifying detailed information on the description of due diligence, actual and potential adverse impacts identified, and appropriate measures taken with respect to those impacts.

• By early 2027 - The Commission is expected to release guidance on how to conduct due diligence in accordance with the obligations of the Directive. The guidance will focus on the identification process, the prioritization of impacts, appropriate measures to adapt purchasing practices, responsible disengagement, appropriate measures for remediation, identification and engagement with stakeholders, notification mechanism and complaints procedure.

• By early 2027 - The Commission is expected to release guidance on the assessment of company-level, business operations, geographic and contextual, product and service, and sectoral risk factors, including those associated with conflict-affected and high-risk areas.

• By early 2027 - The Commission is expected to release the references to data and information sources available for the compliance with the obligations provided for in this Directive, and to digital tools and technologies that could facilitate and support compliance.

• By mid 2027 - The Commission is expected to release practical guidance on the transition plan

Other important milestones with no particular timeline include:

• The Commission will set up a European Network of Supervisory Authorities, composed of representatives of the national supervisory authorities. This will allow coordination and alignment of regulatory, investigative, sanctioning and supervisory practices and the sharing of information when needed.

• The Commission will set up a single help desk through which companies may seek information, guidance and support with regard to fulfilling their obligations.

To learn more about how to prepare your business for compliance with the European Union’s Corporate Sustainability Due Diligence Directive, reach out to our team of experts.