Home
/
Rethink Work blog
/
Sustainability
/
The EU CSDDD: Responsibility along the supply chain

When the U.S. banned imports from Chinese printer giant Ninestar Group in 2023 over alleged forced labor links, using the Uyghur Forced Labour Prevention Act (UFLPA) enacted in 2021 to protect the Uyghur minority from forced labor and prevent products made under such conditions from being imported into the US, it sent shockwaves through global supply chains.  

For European businesses, this has also underlined that human rights violations aren’t just ethical concerns – they’re also operational risks. With the new EU Corporate Sustainability Due Diligence Directive (CSDDD), which came into force on 25 July 2024, and which all EU countries must transpose into national law by 26 July, 2027 (France and Germany have already done so, but will have to readjust), those risks are about to get a lot more visible. 

It’s a landmark law that requires large companies to take responsibility for human rights and environmental impacts – not just in their own operations, but across their entire value chains. From child labor and unsafe working conditions to deforestation and pollution, the directive aims to ensure businesses identify and address potential negative impacts on human rights and the environment, ensuring compliance across their organization along with their subsidiaries and business partners. 

This isn’t just about ticking boxes. It’s about building trust, protecting people and the planet, and future-proofing your business in a world where transparency is no longer optional but essential. In this blog article, you will learn what the CSDDD regulates and why it is so urgently needed  

What are the requirements of CSDDD? 

The CSDDD directive requires companies to integrate due diligence obligations relating to human rights and the environment into their business processes. Companies must: 

  • Identify, assess, and prioritize risks and negative impacts on human rights and the environment in their supply chains 
  • Take preventive measures and mitigate harm—human rights violations and environmental damage 
  • Take remedial action when harm occurs 
  • Establish accessible complaints procedures 
  • Conduct effectiveness reviews 
  • Monitor their due diligence efforts annually 
  • Develop a transition plan to climate neutrality that is consistent with the Paris Agreement 

On top of this, companies must also keep detailed records and publish their due diligence statements online, making them accessible to regulators and the public. 

Who is affected? 

As it stands, the rules apply to EU companies with over 1,000 employees and €450 million in turnover, as well as non-EU companies with significant EU operations. Smaller businesses aren’t directly covered, but many will be impacted as suppliers or partners in larger value chains. 

Germany and France are already ahead of the curve, thanks to their own national laws – the Lieferkettengesetz and Loi de Vigilance – which have laid the groundwork for CSDDD compliance. For businesses operating in these markets, enforcement may come sooner and with stricter expectations.  

Potential changes to CSDDD rules: ‘Omnibus’

Ultimately, the CSDDD might impact just large EU companies with over 5,000 employees and €1.5 billion in turnover. This is because, on 26 February 2025, the European Union submitted a package of proposals (‘Omnibus’) that somewhat relaxes the complex CSDDD regulations adopted to date.

Why the directive is necessary – real-life examples of human rights and environmental damage

The CSDDD responds to numerous cases in which companies or their suppliers have violated fundamental human rights or disregarded environmental standards. Some well-known examples show how urgent the binding due diligence obligations are:

  • Textile industry in Bangladesh: Over 1,100 people lost their lives when the Rana Plaza factory building collapsed in Bangladesh in 2013. The disaster revealed massive safety deficiencies and a lack of responsibility on the part of international fashion brands.
  • Cobalt mines in Congo: According to Amnesty International, thousands of children work in life-threatening conditions mining cobalt, a raw material used in batteries for smartphones and electric cars.
  • Cocoa farming in West Africa: Around 1.5 million children toil on cocoa plantations in Ghana and Ivory Coast, often using dangerous tools and without schooling.
  • Construction site in Brazil: Brazil’s Labour Ministry uncovered “slavery-like” conditions at a BYD construction site in Bahia.
  • Palm oil plantations in Indonesia and Malaysia: To make room for palm oil cultivation, large areas of rainforest are being cleared or burned. This leads to massive CO₂ emissions, loss of biodiversity, and displacement of indigenous communities. Many global food and cosmetics companies are therefore being criticized for sourcing palm oil without adequate origin controls.
  • Illegal gold mining in Brazil: Mercury is used to extract gold in the Brazilian Amazon region. This mercury then ends up in the landscape, waterways, and food chain without being adequately treated. This causes serious damage to the health and environment of the indigenous population. As a result of gold mining, huge crater fields have been left in the middle of the rainforest. Mining is actually prohibited in indigenous territories. However, large mining companies currently have applications to mine for gold on 6.2 million hectares of indigenous land and protected areas in Brazil.
  • Deforestation in Brazil: Between 2008 and 2020, Brazilian beef giant JBS is estimated to have been linked to deforestation affecting up to 200,000 hectares through its direct supply chain, and as much as 1.5 million hectares via its indirect suppliers. World Animal Protection claims that global fast-food brand McDonald’s sources large amounts of beef and soy through its supply-chain that are closely tied to deforestation.
  • Toxic waste and pollution in Columbia: The Veolia Group, a multinational waste management company, has faced accusations of polluting protected wetlands in Colombia. As reported by Edie.net, the company allegedly discharged hazardous waste into sensitive natural areas.

These cases illustrate why it is so important for companies to take responsibility for their global impact.

Opportunities for all groups

CSDDD is designed to address these realities. And while compliance comes with costs – such as system upgrades, supplier engagement, and reporting infrastructure – it also brings tangible benefits. The EU underlines a number of benefits for different stakeholders to be gained from the implementation of CSDDD:

Benefits for citizens:

  • Better protection of human rights, including labor rights.
  • Healthier environment for present and future generations, including climate change mitigation.
  • Increased trust in businesses.
  • More transparency enabling informed choices.
  • Better access to justice for victims.

Benefits for companies:

  • A harmonized legal framework in the EU, creating legal certainty and a level playing field.
  • Greater customer trust and employees’ commitment.
  • Better awareness of companies’ negative human rights and environmental impacts, and less liability risks.
  • Better risk management, more resilience, and increased competitiveness.
  • Increased attractiveness for talent, investors, and customers.
  • Increased incentives for innovation.
  • Better access to finance.

Benefits for developing countries:

  • Better protection of human rights and the environment.
  • Sustainable investment, capacity building, and support for value chain companies.
  • Improved sustainability-related practices.
  • Increased take-up of international standards.
  • Improved living conditions for people.

What businesses should do now

If you’re a company operating in Europe, now is the time to prepare, so you can play your part in upholding corporate responsibility as well as meeting legislation requirements.

  • Mapping your supply chain to identify high-risk areas.
  • Engaging suppliers to align expectations and build capacity.
  • Investing in digital tools for traceability, auditability, and ESG reporting.
  • Reviewing internal policies to ensure alignment with CSDDD and related frameworks.
  • Treating sustainability due diligence as a cross-functional priority.

Taking responsibility means shaping the future

The CSDDD is a central component of European sustainability policy – along with the Corporate Sustainability Reporting Directive (CSRD) and the EU taxonomy. Together, these regulations create a binding framework that makes sustainable business practices no longer optional, but mandatory.

The examples from Bangladesh, Congo, Indonesia, and Brazil show that this is not a theoretical debate – but a question of humanity, justice, and sustainability. Companies that act early will be better positioned to lead on sustainability, build trust, and gain competitive advantages – with customers, investors, and talent alike. Those who act now can not only comply with laws, but also actively contribute to a more sustainable and fairer economy.

Share:

Rate this article