The Omnibus I Directive introduced a number of important changes to the original CSDDD, including:

• reducing the number of companies in scope;
• postponing the application of the due diligence obligations until July 2029;
• replacing the phased implementation timetable with a single application date;
• Implementing a specific two-stage scoping and assessment process requiring a scoping exercise based on reasonably available information followed by in-depth assessment of any high or severe risks identified
• extending the monitoring cycle so that companies review the effectiveness of their due diligence measures at least every five years; and
• simplifying certain reporting and administrative requirements.

The Directive’s core requirement to conduct human rights and environmental due diligence remains unchanged.

The CSDDD and the CSRD are complementary but have different objectives. The CSRD is a reporting regime, requiring companies within its scope to disclose information on sustainability-related risks, impacts and performance. The CSDDD is a conduct and governance regime, requiring companies within its scope to undertake due diligence to identify and address adverse human rights and environmental impacts and integrate these processes into their policies and risk management systems.

The two frameworks also interact. The CSRD value chain cap limits the sustainability information that companies can require from smaller value chain partners for reporting purposes, but does not restrict information requests made for CSDDD due diligence. Following the Omnibus I amendments, CSDDD requirements will apply from 26 July 2029, while CSRD reporting requirements apply on different timelines depending on the company concerned.

In simple terms, the CSRD focuses on what companies report, while the CSDDD focuses on how they identify and address adverse impacts.

The CSDDD applies across both the upstream and downstream parts of a company’s chain of activities. This means due diligence is not limited to direct business partners. Companies are required to identify and address adverse human rights and environmental impacts that may occur further along the value chain.

The upstream chain includes activities related to the production of goods or provision of services, such as the sourcing of raw materials, manufacturing, transport and supply. The downstream chain covers the distribution, transport and storage of a company’s products where these activities are carried out for or on behalf of the company, subject to certain exclusions.

No. Following the amendments introduced by the Omnibus I Directive, the CSDDD no longer requires companies to adopt or implement a climate transition plan.

However, companies that are subject to the Corporate Sustainability Reporting Directive (CSRD) may still be required to disclose information about their climate transition plans under the European Sustainability Reporting Standards (ESRS). In practice, many companies will therefore continue to develop and maintain transition plans to meet investor expectations, support decarbonisation strategies and comply with other reporting requirements.

The requirement to conduct human rights and environmental due diligence under the CSDDD remains separate from climate transition planning and climate-related disclosures.

A risk-based approach means that companies are not expected to approach every part of their operations and chain of activities in the same level of detail. Instead, companies should use reasonably available information to identify where adverse impacts are most likely to occur and be most severe and prioritise those areas for further assessment and action.

The focus is therefore on prioritising salient risks and directing resources to where they are most needed.

Yes, potentially.

The CSDDD applies to non-EU companies that generate more than EUR 1.5 billion turnover in the EU, regardless of where they are headquartered. Some UK-headquartered businesses may therefore fall directly within scope.

In addition, UK companies that are not directly in scope may still be affected because customers that are subject to the CSDDD may request information or require certain standards and contractual commitments from their suppliers and business partners.

Companies should be able to demonstrate that they have implemented an effective due diligence process and taken appropriate measures in response to identified risks.

Evidence may include:

• governance arrangements and policies,
• scoping methodologies and risk assessments,
• in-depth impact assessments for higher-risk areas,
• records of meaningful stakeholder engagement,
• action plans and remediation measures,
• progress and impact measurement
• grievance procedures escalation and handling records,
• monitoring activities; and
• internal documentation supporting annual due diligence reporting.

Maintaining clear documentation and audit trails will be essential.

Suppliers and other business partners may play an important role in providing information about potential human rights and environmental impacts and in supporting mitigation and remediation efforts.

Companies are expected to engage with business partners where risks have been identified and may require information, cooperation and corrective action from suppliers as part of their due diligence processes.

Businesses that are not directly in scope of the CSDDD may nevertheless receive requests for information from customers that are subject to the Directive.