Global implications of due diligence acts
Hot Topic | March 2025
Proposed changes to the EU’s CSDDD aim to simplify due diligence requirements.
March 2025 Update: The European Commission (EC) has launched an 'Omnibus Initiative' to reduce sustainability regulatory reporting burden and due diligence requirements for companies operating in the EU. This initiative includes proposed changes to several key directives and regulations, including the Corporate Sustainability Due Diligence Directive (CSDDD). Proposed changes to the CSDDD include reducing the number of business partners and stakeholders to consider and reducing the required frequency of monitoring exercises. The proposals also include delaying initial application by one year for the largest companies.
Our Hot Topic has been updated to discuss these proposed amendments.
Applicability
- The European Commission’s CSDDD applies to companies that meet certain employee, revenue and/or royalty thresholds.
- The Omnibus package published in February 2025 includes proposals that would amend the CSDDD.
Relevant dates
| Compliance with non-reporting related due diligence obligations | Reporting on due diligence obligations |
Wave 1
| July 26, 20271 | 20291 |
Wave 2
| July 26, 2028 | 2030 |
Wave 3
| July 26, 2029 | 2030 |
| Note 1. A proposal would delay the effective dates for Wave 1 companies by one year – i.e. to July 26, 2028 for compliance with non-reporting related due diligence obligations, and 2030 for reporting. There would be no change to the effective dates for Waves 2 and 3 companies. | ||
Key impacts
Due diligence obligations cover the value chain
- The CSDDD introduces due diligence obligations for companies related to actual and potential adverse human rights and environmental impacts.
Scoping applies to both EU and non-EU companies
- Non-EU companies (or groups) are in scope (irrespective of whether they have subsidiaries or branches in the EU) if, for two consecutive financial years (the financial year preceding the last and the financial year prior to that), they had:
- > €450M net turnover in the EU; or
- > €80M net turnover in the EU and > €22.5M royalties in the EU from franchising or licensing agreements in the EU.
A transition plan must be adopted
- To contribute to combating climate change, companies must adopt a transition plan for climate change mitigation that is, through best efforts, compatible with the transition to a sustainable economy and the limiting of global warming to 1.5 degrees Celsius in line with the Paris Agreement.
Obligations complement other EU legislation – particularly the CSRD
- The CSDDD reporting obligation can be covered by reporting under the Corporate Sustainability Reporting Directive (CSRD), and the CSDDD’s obligation to adopt a transition plan complements the CSRD’s transition plan reporting obligation.
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Sustainability in the EU - Global implications of due diligence acts
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