EU Corporate Sustainability Due Diligence Directive (CSDDD)

This German national law requires companies to establish a risk management system, publish annual reports, and set up a grievance mechanism to prevent and remedy human rights violations, such as child and forced labour, and environmental risks, such as mercury pollution or breaches of the Stockholm Convention on POPs, both within their own operations and among their direct and indirect suppliers. With the CSDDD's scope significantly narrowed by the Omnibus I reform (in force since March 2026), LkSG is no longer best understood as a law being "absorbed and scaled back" into CSDDD. Instead, it is expected to remain an important standalone law in Germany with a broad practical reach, continuing to impose human rights and environmental due diligence obligations on mid-sized companies that now fall outside the CSDDD's scope.

This card focuses on the concrete implementation requirements for the human rights and environmental due diligence (DD) process at the core of the EU Corporate Sustainability Due Diligence Directive (CSDDD: Directive (EU) 2024/1760). CSDDD codifies the six-step due diligence process defined in the OECD Guidelines for Responsible Business Conduct as a binding legal obligation. Covered companies must identify, prioritize, and address adverse human rights impacts (such as child labor, unfair labor practices, and unpaid wages) and environmental harms (such as unlawful discharge, release of hazardous substances, and deforestation) across their entire chain of activities — not only their own operations, but also subsidiaries and both upstream (raw material sourcing and manufacturing) and downstream (transport and storage) activities. Companies are also required to establish grievance mechanisms. In identifying and assessing adverse impacts, they may make use of independent reports and industry or multi-stakeholder initiatives, among other resources.

This card explains how the climate transition plan obligation under the EU Corporate Sustainability Due Diligence Directive (CSDDD) changed as a result of the 2026 Omnibus reform. Article 22 of the original CSDDD (Directive (EU) 2024/1760) required in-scope companies to adopt and implement a transition plan aligned with the Paris Agreement's 1.5°C goal and the EU's 2050 climate neutrality target, including five-year interim Scope 1, 2, and 3 emissions-reduction targets and board-level oversight. The Omnibus I reform (Directive (EU) 2026/470), in force since 18 March 2026, deleted this obligation from the CSDDD entirely. In-scope companies are no longer legally required to adopt or implement a transition plan under the CSDDD. This does not mean all climate-related disclosure obligations have disappeared, however. Under the CSRD (Corporate Sustainability Reporting Directive), companies that already have a transition plan must still disclose it under the ESRS E1 standard. What the CSDDD required was substantive adoption and implementation; what the CSRD requires is disclosure of a plan if one exists. The two are legally distinct.

This card covers how administrative enforcement (penalties) and civil liability operate under the EU Corporate Sustainability Due Diligence Directive (CSDDD). Under the original Directive (in force from 2024), Member State supervisory authorities could impose penalties of at least 5% of a company's worldwide net turnover, and the Directive established an EU-harmonised civil liability regime under which victims of non-compliance — or their representatives, including NGOs and trade unions — could bring damages claims directly before national courts. The Omnibus I reform (Directive (EU) 2026/470), in force since 18 March 2026, changed both of these mechanisms significantly. First, the penalty ceiling was changed from a minimum floor of 5% to a maximum cap of 3% of worldwide net turnover. Second, the EU-harmonised civil liability regime was removed altogether: claims for damages arising from due diligence failures are now governed exclusively by the national law of each Member State. There is no unified EU standard, and the EU-level right for NGOs and trade unions to bring representative claims no longer exists.