CSDDD: From reporting to supply chain management

The Corporate Sustainability Due Diligence Directive (CSDDD) shifts corporate due diligence obligations from reporting to operational management. Affected companies must systematically identify, assess and manage human rights and environmental risks throughout their value chain; as with the GDPR, new governance, control and monitoring mechanisms are required. The focus is shifting from individual measures to the interlinked structures within the supply chain and operational decision-making processes.

Our experts demonstrate how this transition can be managed: they define the scope of application, examine the interplay with other EU regulations and develop an integrated management model for your supply chain.

The growing pressure to adapt to the CSDDD is changing cost structures and market requirements, and shaping expectations from several quarters. Shortcomings in due diligence processes can have a negative impact on financing opportunities and business relationships.

Business success therefore increasingly depends on demonstrably meeting requirements throughout the supply chain.

• According to calculations by the Dutch research organisation SOMO, around 1,400 corporate groups worldwide fall under the scope of the CSDDD, including some 280 parent companies in Germany.
• Contracts, audits and data requirements create a multiplier effect that extends deep into the supply chain.
• Inadequate implementation carries the risk of fines, reputational damage, exclusion from supply chains and – depending on national implementation – civil liability risks.
• The CSDDD offers significant potential for synergies with various regulatory frameworks, including the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR) and the EU Regulation on Forced Labour (FLR), particularly with regard to supplier data, compliance processes and governance structures.
• From an operational perspective, the focus is shifting towards supplier assessment, higher transparency and data requirements, and the diversification of supply relationships.