EU carbon rules / Regulations / CSDDD Corporate Sustainability Due Diligence Directive
In force Directive Sustainability reporting & due diligence
CSDDD Corporate Sustainability Due Diligence Directive
Narrowed by 2026/470 (Omnibus I); transposition 2028-07-26, obligations from 2029
- Reference
- Directive (EU) 2024/1760
- Key date
- 2028-07-26 transposition
- Applies to
- Large companies in Europe and their supply chains
01
Who the regulation applies to
This regulation applies to:
- Companies established under Member State law with more than 5 000 average employees during the financial year and global net turnover exceeding EUR 1 500 000 000 in the preceding financial year (Article 2(1)(a) of Directive (EU) 2024/1760, as amended by 2026/470)
- Ultimate parent companies of groups meeting that threshold, where the company itself does not meet it
- Companies that enter into franchise/licence agreements in the EU with royalties exceeding EUR 75 000 000 and global net turnover exceeding EUR 275 000 000, or the ultimate parent companies of such groups
- Companies established under third-country law with net turnover in the EU exceeding EUR 1 500 000 000 in the financial year preceding the last financial year, or meeting the corresponding franchise/licence conditions
- (Not applicable) Alternative investment funds (AIFs) and undertakings for collective investment in transferable securities (UCITS) (Article 2(8))
- (Not applicable) An ultimate parent company that is predominantly a holding company and does not participate in the management, operation or financial decisions of the group may be exempted (the designated EU subsidiary must perform the obligations on its behalf)
- (Condition) The conditions in paragraph 1 or 2 must be met in two consecutive financial years (Article 2(5))
The thresholds set out in this entry are the current values as amended by Directive (EU) 2026/470 (Omnibus I): more than 5 000 average employees and global net turnover exceeding EUR 1 500 000 000 (for franchises/licences, royalties exceeding EUR 75 000 000 and net turnover exceeding EUR 275 000 000). The transposition deadline is 26 July 2028, and the obligations apply from 26 July 2029 (Article 16 from financial year 2030). Article 2(8) excludes AIFs and UCITS in a separate provision and is therefore not included among the verbatim clauses.
The following provisions define its scope:
Article 1 — Subject matter
1. This Directive lays down rules on:
(a)
obligations for companies regarding actual and potential human rights adverse impacts and environmental adverse impacts, with respect to their own operations, the operations of their subsidiaries, and the operations carried out by their business partners in the chains of activities of those companies;
(b)
liability for violations of the obligations as referred to in point (a); and
(c)
the obligation for companies to adopt and put into effect a transition plan for climate change mitigation which aims to ensure, through best efforts, compatibility of the business model and of the strategy of the company with the transition to a sustainable economy and with the limiting of global warming to 1,5 oC in line with the Paris Agreement.
Article 2(1) — Scope (Union companies)
1. This Directive shall apply to companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions:
(a)
the company had more than 1 000 employees on average and had a net worldwide turnover of more than EUR 450 000 000 in the last financial year for which annual financial statements have been or should have been adopted;
(b)
the company did not reach the thresholds as referred to in point (a) but is the ultimate parent company of a group that reached those thresholds in the last financial year for which consolidated annual financial statements have been or should have been adopted;
(c)
the company entered into or is the ultimate parent company of a group that entered into franchising or licensing agreements in the Union in return for royalties with independent third-party companies, where those agreements ensure a common identity, a common business concept and the application of uniform business methods, and where those royalties amounted to more than EUR 22 500 000 in the last financial year for which annual financial statements have been or should have been adopted, and provided that the company had or is the ultimate parent company of a group that had a net worldwide turnover of more than EUR 80 000 000 in the last financial year for which annual financial statements have been or should have been adopted.
Article 2(2) — Scope (third-country companies)
2. This Directive shall also apply to companies which are formed in accordance with the legislation of a third country and fulfil one of the following conditions:
(a)
the company generated a net turnover of more than EUR 450 000 000 in the Union in the financial year preceding the last financial year;
(b)
the company did not reach the threshold as referred to in point (a) but is the ultimate parent company of a group that on a consolidated basis reached that threshold in the financial year preceding the last financial year;
(c)
the company entered into or is the ultimate parent company of a group that entered into franchising or licensing agreements in the Union in return for royalties with independent third-party companies, where those agreements ensure a common identity, a common business concept and the application of uniform business methods, and where those royalties amounted to more than EUR 22 500 000 in the Union in the financial year preceding the last financial year; and provided that the company generated, or is the ultimate parent company of a group that generated, a net turnover of more than EUR 80 000 000 in the Union in the financial year preceding the last financial year.
02
What the regulation requires
| Duty | Trigger | Evidence | Timing |
Carry out human rights and environmental due diligence
Identify, prevent, mitigate and report human rights and environmental (including climate) impacts in the value chain. | EU companies and third-country companies operating in the EU that meet the size thresholds | Due diligence policy, due diligence statement, grievance mechanism | Phased according to the timetable (adjusted by the Omnibus) |
Draw up a climate transition plan
Due diligence obligations include a transition plan aligning the business model with the 1.5°C pathway. | Companies in scope | Climate transition plan | After entering scope |
03
Key provisions
Article 5(1) — Due diligence policy
Member States shall ensure that companies conduct human rights and environmental due diligence as laid down in Articles 7 to 16 ('due diligence') by carrying out the following actions: (a) integrating due diligence into their policies and risk management systems ...; (b) identifying and assessing actual or potential adverse impacts ...; (c) preventing and mitigating potential adverse impacts ...; (d) remediating actual adverse impacts ...; (e) carrying out meaningful engagement with stakeholders ...; (f) establishing and maintaining a notification mechanism and a complaints procedure ...
Article 7(1) — Identification and assessment of adverse impacts
Companies shall identify and assess actual and potential adverse impacts arising from their own operations and those of their subsidiaries ... and, where the adverse impact is linked to a company's chain of activities, those of their business partners.
Article 8(1) — Preventing and mitigating potential adverse impacts
Companies shall take the appropriate measures to prevent the potential adverse impacts ... identified pursuant to Article 7, or, where such impacts have already occurred, to mitigate them ...
Article 10(1) — Remediating actual adverse impacts
Where a company identifies an actual adverse impact caused by its own operations or those of its subsidiaries, the company shall remediate that adverse impact ...
Article 12(1) — Communicating on due diligence
Companies ... shall report on the matters covered by this Directive ... by publishing an annual statement on their website ...