The new CSDDD: An overview of the EU Supply Chain Directive

| Update: August 19, 2024

🕓 Reading time 8 minutes

Table of contents

1. What are the objectives of the CSDDD (CS3D)?

2. Implementation of the CSDDD in Germany by adapting the LkSG

3. Who does the CSDDD affect?

4. What is the difference between CSDDD and CSRD?

1. What are the objectives of the CSDDD (CS3D)?

The Corporate Sustainability Due Diligence Directive, abbreviated to CSDDD or CS3D, is a new EU directive that aims to encourage companies to to thoroughly monitor their supply chains and internal practices and regulate.

The initiative aims to create a high level of transparency and ensure that European companies in their global activities Respect human rights and use environmentally friendly practices. Under the CSDDD, companies must identify potential risks to human rights and the environment, take measures to mitigate those risks, report on their efforts, and ensure that their supply chains do not have negative impacts on society or the planet.

2. Implementation of the CSDDD in Germany by adapting the LkSG

The implementation of the Corporate Sustainability Due Diligence Directive (CS3D) into national law is an essential step that all EU Member States must take to ensure compliance with the new directive. Implementation into German law is to take place by July 26, 2026.

For Germany, this means that the existing Supply Chain Due Diligence Act (LkSG) adapted must be carried out in order to comply with the requirements of the CS3D. The LkSG is an existing law in Germany that requires companies to review their supply chains for human rights violations and environmental risks.

However, the CS3D could impose stricter or additional requirements, which means that German law expanded or modified must be fully compliant. Adjustments could include expanding the scope of the LkSG to include more companies, stricter due diligence obligations, or more detailed reporting requirements. For example, the CS3D could require companies to audit not only their direct suppliers but also suppliers further down the chain, going beyond the current requirements of the LkSG.

3. Who does the CSDDD affect?

The planned scope of the new directive is to include different groups of companies, depending on their size and turnover.

As of 14 March 2024, the plan is that in the long term EU companies and their parent companies are covered by the Directive if they more than 1000 employees and generate a global annual turnover of over 450 million euros. Until then, a gradual Application planned according to company size and turnover. 

• From 2027, Three years after the entry into force of the EU Supply Chain Directive (CS3D), this directive will apply to companies that employ more than 5,000 people and have a turnover of more than 1.5 billion euros.
• In the following year, 2028, Four years after the introduction of CS3D, the scope of application is to be expanded to include companies with more than 3,000 employees and a turnover of over 900 million euros.
• Finally, in 2029, Five years after the directive comes into force, the CS3D will also be relevant for companies with more than 1,000 employees and a turnover of more than EUR 450 million.

4. What is the difference between CSDDD and CSRD?

The Corporate Sustainability Reporting Directive (CSRD) focuses on improving the transparency and quality of sustainability reports that companies are required to publish.

In contrast, the CSDDD concrete action requirements It sets out the standards that companies must meet to ensure their business practices are sustainable. While the CSRD encourages companies to report on their activities, the CSDDD requires them to act proactively and improve their processes to avoid negative impacts on human rights and the environment.

The CSRD already applies to companies with 250 or more employees or listed SMEs. The CSDDD only applies to larger companies with over 1,000 employees and a certain level of revenue.

There are also synergies between the two directives: Companies that have a transition plan for the Climate protection that complies with the requirements of the CSRD and the ESRS Standards according to ESRS E1-1 thus also meet the requirements set by the CS3D for such transition plans. The basis for this is always the assessment of the greenhouse gas balance over Scope 1, 2 and 3, the so-called Corporate carbon footprint.

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