The CSDDD (Corporate Sustainability Due Diligence Directive) has introduced new EU-wide requirements since July 25, 2024, aimed at better protecting human rights and the environment throughout the entire supply chain. The CSDDD was published in the EU Official Journal on July 25, 2024. However, member states must transpose it into national law by July 26, 2026. Implementation and interpretation may therefore vary by country. Companies are required to comply with stricter due diligence obligations, report more comprehensively, and develop climate transition plans aligned with the 1.5-degree target of the Paris Agreement. Notably, the CSDDD is considered a landmark in global supply chain regulation, setting a new standard for corporate accountability and transparency, as highlighted by the European Commission (https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3931).
| Aspect | CSDDD | LkSG |
|---|---|---|
| Climate Protection Focus | Very strong | Less strong |
| Supply Chain | Upstream & Downstream | Upstream only |
| Liability | Civil liability | None |
| Fines | Up to 5% of annual turnover | Set lower |
Companies should adapt their ESG strategies now to meet the new requirements and avoid sanctions. Early adaptation is especially important as enforcement is expected to be rigorous, with national authorities empowered to investigate and sanction non-compliance (https://www.lexology.com/library/detail.aspx?g=5b9e9e9e-5c2d-4c6e-8e7e-0e3e4f7b3c1e).
The Omnibus amendments focus on three core areas: stricter due diligence obligations, harmonized reporting requirements through the CSRD, and expanded supply chain rules. These amendments reflect a broader trend in the EU towards integrating sustainability into the core of corporate governance (https://www.euractiv.com/section/sustainability/news/eu-adopts-corporate-sustainability-due-diligence-directive/).
The CSDDD significantly tightens due diligence requirements compared to the LkSG. From July 26, 2027, the new rules apply to companies with more than 5,000 employees and net turnover exceeding €1.5 billion. These thresholds will be gradually lowered:
| Date | Employees | Minimum Turnover |
|---|---|---|
| 26.07.2027 | > 5,000 | €1.5 bn |
| 26.07.2028 | > 3,000 | €900 m |
| 26.07.2029 | > 1,000 | €450 m |
Companies must implement a comprehensive due diligence process covering risk identification, preventive measures, and control mechanisms to ensure effectiveness. In addition, a complaints mechanism must be established that is accessible at all stages of the value chain. These requirements are incorporated into the compliance checklist in the next chapter. According to the European Coalition for Corporate Justice, these mechanisms are designed to empower affected communities and workers, increasing the effectiveness of redress (https://corporatejustice.org/news/eu-corporate-sustainability-due-diligence-directive-adopted/).
The CSDDD aligns reporting requirements with the CSRD to avoid double reporting. It also requires the creation of a climate transition plan that aligns with the 1.5°C target—a requirement not included in the LkSG. This alignment is expected to streamline compliance for companies already subject to the CSRD and other EU sustainability frameworks (https://www.csrwire.com/press_releases/792731-eu-adopts-corporate-sustainability-due-diligence-directive).
The CSDDD expands the concept of the “chain of activities” to include upstream, downstream, and indirect suppliers. In contrast, the LkSG is limited to direct suppliers. This broader scope means companies must map and manage risks not just in their immediate suppliers but throughout their value chain, including product use and disposal (https://www.osborneclarke.com/insights/eu-corporate-sustainability-due-diligence-directive-adopted).
| Aspect | CSDDD Requirement | Practical Implementation |
|---|---|---|
| Scope | Upstream and downstream | Covers the entire value chain |
| Due Diligence | Equal treatment of direct and indirect suppliers | Broader risk management |
| Liability | Civil liability for violations | Stronger control mechanisms |
| Sanctions | Up to 5% of global annual turnover | Robust compliance systems |
Experts recommend using the next two years to adapt internal compliance procedures. In 2023, the BAFA reviewed 486 cases under the LkSG, indicating increased scrutiny. The expanded requirements make it necessary to adjust risk management and supply chain communication. A recent study by the European Centre for Development Policy Management highlights that companies with robust supplier engagement and traceability systems are better positioned to meet these new obligations (https://ecdpm.org/work/corporate-sustainability-due-diligence-directive).
These changes lay the foundation for upcoming ESG strategy updates and the compliance checklist.
Criticism and Open Questions
Despite the generally welcomed goal of the CSDDD—to strengthen human rights and environmental protection—there are also critical voices. Business associations fear increased legal uncertainty and bureaucracy, especially due to civil liability. This is considered difficult to integrate into international supply chains, where European companies have only limited influence. Some legal experts also see risks from competing rights to sue in different EU member states. According to a Financial Times analysis, these concerns are prompting calls for clear guidance and harmonized enforcement across the EU to prevent fragmentation.
German companies are currently adapting their processes to meet the requirements of the CSDDD (Corporate Sustainability Due Diligence Directive). These adjustments mainly affect risk management, supply chain communication, and reporting obligations. According to a survey by PwC Germany, over 60% of large German firms have already started to review their supply chain risk frameworks in anticipation of the CSDDD (https://www.pwc.de/en/sustainability/csddd.html).
The CSDDD expands the focus of risk analysis to the entire value chain—from production to use. A key point is the integration of climate risks into existing risk management systems.
Key aspects of the new approach:
Additionally, collaboration with stakeholders within the supply chain will be intensified. This is consistent with recommendations from the OECD Due Diligence Guidance for Responsible Business Conduct, which emphasizes stakeholder engagement as a best practice (https://www.oecd.org/corporate/mne/due-diligence-guidance-for-responsible-business-conduct.htm).
The CSDDD requires companies to make communication along the supply chain more transparent and accessible. Two key measures are:
Companies must provide detailed information on their due diligence measures in their annual reports. These reports must include:
Non-compliance can result in severe penalties of up to 5% of global annual turnover. The European Parliament has stressed that these sanctions are intended to create a strong deterrent effect and ensure meaningful compliance (https://www.europarl.europa.eu/news/en/press-room/20240419IPR20509/corporate-sustainability-due-diligence-parliament-adopts-new-eu-law).
Companies that view due diligence not just as a regulatory obligation but as a strategic tool can benefit in the medium term. Transparent supply chains, credible climate action, and effective stakeholder engagement strengthen trust among customers, investors, and employees. Research by McKinsey & Company indicates that firms with mature ESG and due diligence practices outperform peers in risk mitigation and brand reputation (https://www.mckinsey.com/capabilities/sustainability/our-insights/the-esg-premium-new-perspectives-on-value-and-performance).
This guide outlines CSDDD compliance implementation in three clear phases and presents suitable tools.
Compliance with CSDDD requirements takes place in three main steps:
These steps form the basic framework. For timely and efficient implementation, professional support is recommended.
Fiegenbaum Solutions offers support in the following areas:
Risk Management
Reporting Tool
Complaints Mechanism
The Omnibus amendments introduce five main changes:
| Criterion | CSDDD (Omnibus) |
|---|---|
| Geographical Scope | EU and beyond |
| Chain-of-Activities Concept | Includes all, including indirect and downstream suppliers |
| Civil Liability | Newly introduced |
| Accessible Complaints Mechanism | Mandatory for all affected parties |
| Sanctions | Up to 5% of global annual turnover |
In comparison, the German Supply Chain Due Diligence Act (LkSG) is limited to direct suppliers, with no civil liability or mandatory accessible complaints systems.
In the next section, we explain how you can effectively implement these changes in practice.
Here are concise recommendations for final implementation:
Central tasks include: human rights and environmental due diligence procedures, developing a climate transition plan in line with the 1.5-degree target, integrating all suppliers into risk management, reporting according to CSRD standards, and establishing accessible complaints procedures.
A structured approach can be implemented using the checklist from the implementation guide. Companies should review and adapt their ESG strategies. Especially crucial is risk management that is updated every two years and as needed.
If internal resources are insufficient, consider specialized consulting services. You’ll find details on available support in the section "Fiegenbaum Solutions Services."
Here I answer the most frequently asked questions about implementing the CSDDD in Germany.
The CSDDD came into force on July 25, 2024. Member states had to transpose it into national law by July 26, 2026. The staggered thresholds apply from 26.07.2027, 26.07.2028, and 26.07.2029 (see the “New Due Diligence Obligations” section for details).
The regulation applies to both domestic and foreign companies that meet the relevant thresholds. Companies in manufacturing, textile and food retail, agriculture, forestry and fisheries, and raw materials extraction are particularly affected. Franchise and licensing companies with turnover over €80 million or license fees from €22.5 million are also subject to the CSDDD. The European Commission provides a detailed breakdown of affected sectors and company types (https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-due-diligence_en).
To comply, existing LkSG measures should be adapted to CSDDD standards. This includes introducing a climate transition plan with at least biennial effectiveness reviews. Violations can result in fines of up to 5% of global turnover. An accessible complaints mechanism and regular reporting are also mandatory.
The CSDDD goes beyond the LkSG by covering both upstream and downstream supply chains, while the LkSG is limited to direct suppliers. The CSDDD provides for civil liability, which the LkSG lacks, and can impose fines of up to 5% of annual turnover. Additionally, the CSDDD places a much stronger emphasis on climate protection, which is less pronounced in the LkSG. Compared to the UK Modern Slavery Act, which focuses primarily on forced labor and human trafficking, the CSDDD covers a broader range of human rights and environmental issues and introduces enforceable obligations with significant penalties (https://www.twobirds.com/en/insights/2024/global/comparing-the-eu-csddd-and-the-uk-modern-slavery-act).
Companies in manufacturing, textile and food retail, agriculture, forestry and fisheries, and raw materials extraction are particularly affected. These sectors are considered high-risk due to complex global supply chains, frequent subcontracting, and exposure to environmental and human rights challenges. For example, the textile sector faces risks related to labor rights and environmental pollution, while agriculture and mining are exposed to land use and biodiversity concerns (https://www.business-humanrights.org/en/latest-news/eu-corporate-sustainability-due-diligence-directive-csddd/).