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Impact of EU supply chain laws on US companies

Hot Topic | May 2024

A German supply chain due diligence act is already effective, with an EU-wide directive nearly final.

MAY UPDATE: A compromise text of the Corporate Sustainability Due Diligence Directive (CSDDD) has been agreed by the Council of the EU and the European Parliament. The compromise text is expected to be formally endorsed by the Council in May and then published in the EU Official Journal. The compromise text has made several concessions from the original proposal, including tripling the revenue threshold for non-EU companies from €150M to €450M. The CSDDD section of our Hot Topic will be updated following the Council’s endorsement.

More governments are seeking to regulate activities within supply chains with new laws aiming to prevent and mitigate environmental and social risks within company supply chains. Our Hot Topic takes a look at two such instances in the EU: the German Supply Chain Due Diligence Act (SCDDA), which took effect in January 2023, and the EU’s proposed CSDDD. 


  • The Supply Chain Due Diligence Act (SCDDA) applies to companies with a certain number of employees in Germany. 
  • The compromise text for a CSDDD would apply to companies that meet certain employee and/or revenue thresholds. This compromise text replaces the December 2023 provisionally agreed to CSDDD, on which our Hot Topic is based.

Relevant dates

German Supply Chain Due Diligence Act 

  • Jan 1, 2023 – SCDDA took effect for companies with > 3,000 employees in Germany 
  • Jan 1, 2024 – Scope broadened to companies with > 1,000 employees in Germany 

EU’s Corporate Sustainability Due Diligence Directive 

  • Feb 2022 – Proposed CSDDD presented to the European Parliament ('Parliament') and Council of the EU ('Council') for approval 
  • Dec 2023 – Parliament and Council reached a provisional agreement on the proposed CSDDD
  • March 2024 – The Council agreed to a compromise text of the CSDDD 
  • April 2024 – Parliament approved the compromise text of the CSDDD 
  • May-June 2024 – Pending formal endorsement by Council, it is expected that the directive will be published in the EU Official Journal and enter into force twenty days later. Member States will then have two years to transpose the directive into their national laws.
  • 2027 and beyond – Following a phased approach, a final CSDDD will become effective for the largest companies first.

      Key impacts

      Despite the SCDDA and proposed CSDDD being non-US directives, US and other non-EU companies would be impacted if they meet certain scoping criteria that are discussed in our Hot Topic.

      Determining whether you have to comply

      • The SCDDA applies to companies (either headquartered or with a domestic branch in Germany) with > 3,000 employees (beginning 2023) and > 1,000 employees (beginning 2024) in Germany.  
      • The compromise text of the CSDDD would apply to both EU and non-EU companies that meet certain employee and/or revenue thresholds. For non-EU companies, those thresholds are (1) more than €450 million net revenue generated in the EU, irrespective of whether they have a subsidiary or branch in the EU; or (2) more than €80 million net revenue generated in the EU where the company has entered into franchising or licensing agreements in the EU where royalties exceed €22.5 million in the EU.

      Where to look within your supply chain?

      • The SCDDA applies to the entire supply chain of in-scope companies, which includes the actions of the company in its own business areas and the actions of direct and indirect suppliers.  
      • Companies subject to the compromise text of the CSDDD would be required to assess a broader range of upstream value chain activities extending beyond direct suppliers.

      What risks are considered?

      • The SCDDA aims to prevent or mitigate human rights and environment-related risks; and end violations of both human rights and environment-related obligations.  
      • Companies subject to the compromise text of the CSDDD would be required to assess a broader range of environmental impacts including, for example, adverse impacts on biological diversity, unlawful disposal of waste and pollution from ships. 


      • The SCDDA requires and the compromise text of the CSDDD would require annual reporting on due diligence measures.

      Report contents

      • Fast facts, impacts and actions
      • Background
      • Global implications
      • Germany’s Supply Chain Due Diligence Act: scoping, obligations, reporting and noncompliance
      • The EU’s proposed Corporate Sustainability Due Diligence Directive: scoping, obligations and reporting, timeline, comparison to Germany’s SCDDA, interactions with other EU legislation  

      Download the document

      ESG in Europe - Global implications of supply chain due diligence acts

      Download PDF

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