NOTE: Due to the recent EU decisions to change and delay ESG regulations, check out our latest blog "The Uncertain State of EU ESG Legislation (CSRD & CSDDD) in 2025" for all the latest updates.
By now, everyone in Procurement & Sourcing has heard about “CSDDD” – but as a complex regulation, not everyone might be aware of the ins-and-outs of this recent ESG initiative. The Corporate Sustainability Due Diligence Directive (CSDDD) is the EU’s latest step in turning corporate accountability from a nice-to-have into a must-do. And yes—it’s kind of a big deal.
Whether you're in Procurement, Compliance, Sustainability, or just have the unfortunate honor of reading legal jargon for breakfast, this guide will break down what the CSDDD is all about, why it matters, and how you can avoid scrambling when it comes into full force for your organization.
Let’s dive in 👇🐻
Let’s keep it simple. The CSDDD is an EU directive designed to make companies actively responsible for their environmental and human rights impacts – not just in their own operations, but across their entire global supply chain.
What does that mean in plain English?
Companies will now have to:
In short: Sustainability and human rights due diligence are no longer optional – they’re about to become law.
The directive’s core obligations read like a greatest hits album of ESG expectations:
Companies must analyze their supply chains for potential risks to human rights and the environment.
If risks or violations are found, action must be taken. This includes putting policies in place, collaborating with suppliers, or (if needed) cutting ties with non-compliant suppliers.
Regular reporting and progress-tracking must be baked into operations – not just an annual checkbox exercise.
Larger companies (i.e. the Big Guns) must align with the Paris Agreement by mapping out their transition to a low-carbon business model and putting it into action.
Not everyone has to panic just yet – but a lot of companies need to start preparing ASAP.
Here’s the breakdown:
In other words: If you’re a large business operating in or with the EU, the CSDDD probably applies to you. Even if you're not headquartered in the EU, if you're present in its market, you have to play by its rules or lose your Ticket-2-Trade.
Sure, compliance can feel like a chore. But think beyond the paperwork.
Embracing the CSDDD brings real benefits to both your business and the world at large, encouraging companies to embrace the Triple Bottom-Line of People, Planet, and Profit.
Here’s some of the value and competitive advantages that CSDDD can deliver to your organization:
Fewer PR disasters, legal battles, and regulatory fines – which would definitely be much more a headache for your business than your CSDDD compliance.
Consumers and investors love a company that walks the ESG talk – so CSDDD compliance can be a big boost to your sales and place in the market.
Want to keep doing business in the EU? This directive is your golden ticket. If you don’t get your CSDDD compliance right, your business might miss out on a market of nearly half a billion people.
New ESG regulations are only going to get stricter. Early compliance with CSDDD puts you ahead of the curve and prepared for any new legislation that comes in the future.
Working closely with suppliers fosters trust, transparency, and innovation which can lead to numerous competitive advantages. And let’s be honest – stronger supplier relationships make everyone’s life easier on both sides of the table.
If you haven’t started with your CSDDD compliance yet, don’t worry – you don’t need a time machine. But you do need a timeline to start your process and make it successful.
Here’s how it’s expected to roll out (subject to final votes and adjustments):
2024: Final adoption and publication of the directive.
2025: National transposition begins and EU member states start incorporating the directive into their own laws.
2026-2027: Large companies (turnover €150M+) must begin CSDDD compliance.
2028: Medium-sized companies in high-impact sectors come into scope and must begin CSDDD compliance.
2029 & Beyond: CSDDD enforcement strengthens. Reporting and audits become regular and expected.
📍 Pro tip: Get started now in 2025 to prepare, assess risks, and start aligning your supplier relationships before the 2026-2027 compliance requirements come into effect.
This isn’t a slap-on-the-wrist kind of policy – CSDDD violations can do real damage to your business in multiple ways.
Enforcement mechanisms for CSDDD include:
And remember: “We didn’t know” won’t be an excuse. Due diligence must be proactive, not reactive.
Let’s be honest – voluntary sustainability initiatives haven’t exactly been saving the planet or protecting human rights around the world.
From sweatshops to deforestation to carbon emissions, too many companies have settled for tactical Green Washing to satisfy investors and run nice PR around – but turned a blind eye to the true realities of their global supply chains. The CSDDD says: No more.
This ESG directive is part of the EU’s broader push to:
The CSDDD isn’t going solo. It’s part of a bigger legal ecosystem:
The gold standard for responsible business conduct – CSDDD operationalizes them in EU law.
A German-specific ESG law. Think of CSDDD as its bigger, broader EU-wide sibling.
A directive with similar objectives to CSDDD but a different approach – CSRD focuses on how you report ESG, CSDDD focuses on what you do to prevent harm.
Another key framework CSDDD aligns with.
Translation: Companies will need to harmonize efforts across multiple frameworks, ideally with clear processes and smart tools like modern Supplier Relationship Management (SRM) systems in place.
Let’s get practical. Here's your compliance starter pack:
Where are your current sustainability efforts falling short? Are you accurately measuring your environmental impact? Checking ethical labor practices and worker health and safety? Confirming that your supply chain is clean of deforestation or conflict minerals?
Visibility is everything – know who you’re doing business with (and who they’re doing business with). Embrace supply chain mapping to ensure validation of your global practices, but also look closer at countries or regions with high ESG risks.
Make your compliance requirements clear and concrete. Write them. Embed them. Live them.
Ensure cooperation and trust from your suppliers by getting them on board early. Supplier collaboration beats supplier coercion.
Ensure that nothing gets missed because someone is nervous to point out issues. Make it easy for stakeholders to speak up and for your organization to take action.
Use platforms (such as innovative SRM platforms like Kodiak Hub 👋🐻) to automate supplier risk assessments, document management, supplier ratings, and CSDDD reporting.
Let’s talk numbers (and how to keep them in check).
Estimated Costs:
But here’s the upside:
With platforms like Kodiak Hub’s end-to-end SRM software, businesses and Procurement teams can:
So while the upfront investment is real, the long-term efficiency (and avoidance of fines) makes it worth it.
The Corporate Sustainability Due Diligence Directive isn’t just another acronym to toss on the compliance pile. It’s a real shift in how companies must operate—and how supply chains must function.
With the right approach (and the right tech), CSDDD compliance can be less of a nightmare and more of a competitive advantage.
Ready to make due diligence a breeze?
Kodiak Hub’s innovative, best-of-breed SRM system is here to help you turn complexity into clarity, and not only ensure compliance throughout your entire supply chain – but also unlock strategic, top-line value through enhanced intelligence and stronger supplier relationships.