The CSDDD Directive: Towards Greater Sustainable Responsibility
Europe leads the transition to a sustainable economy
Source: European Commission
Date: 25/10/24
In recent years, sustainability has become a priority for businesses and governments globally. Companies are evaluated not only on their profit but also on the impact they have on the environment, human rights, and society. In this context, the Corporate Sustainability Due Diligence Directive (CSDDD), proposed by the European Commission and enacted on July 25, 2024, aims to establish a regulatory framework that requires companies to integrate sustainability and responsibility criteria throughout their entire value chain.

What is the CSDDD Directive?
This directive establishes a corporate due diligence obligation that covers all stages of a business’s value chain, from direct suppliers to the most distant partners. Companies must identify and address potential or actual negative impacts on human rights and the environment, caused by primary operations, operations of subsidiaries, and, when relevant, also impacts caused in value chains and by business partners.

This creates an integrated approach to sustainability, considering the entire production and supply network and promoting more responsible and transparent business practices. Furthermore, the directive requires large companies to adopt and implement, with maximum commitment, a transition plan for climate change mitigation, aligned with the European Green Deal's goal of climate neutrality by 2050 and with the interim targets set by the European Climate Law.

Implications for companies
  1. Growing Responsibility: The directive introduces greater legal responsibility for companies.
  2. Focus on Large Players and Impact on SMEs: Although the directive mainly focuses on large enterprises, small and medium-sized enterprises (SMEs) will also be indirectly affected. Many SMEs are part of the supply chains of large companies, meaning they will need to adapt to the new sustainability standards to continue operating with their larger partners.
  3. Integration of Sustainability into Corporate Governance: Companies will need to include sustainability as an integral part of their governance and business strategy.
  4. Sanctions and Monitoring: EU member states will be responsible for monitoring compliance with the CSDDD directive, with the possibility of applying sanctions on companies that do not fulfill the requirements. Sanctions may include significant fines or operational restrictions. This fortifies the directive, ensuring that companies take sustainability requirements seriously.
Why is the CSDD a game changer?
The CSDDD directive represents a crucial step towards a more sustainable and responsible European economy. The European Union is pushing businesses to rethink their role within society. It is no longer just about operating according to minimum compliance rules but about taking an active responsibility in creating a fair and more environmentally friendly future.


Regg3 is ready to support companies in this journey, offering innovative solutions and advanced expertise to ensure compliance with the new regulations and create long-term sustainable value.