Quick Comparison
| CSRD | CSDDD | |
|---|---|---|
| Scope | Sustainability reporting and disclosure | Human rights and environmental due diligence obligations |
| Applicability | ~50,000 companies meeting EU size/listing thresholds | ~6,000 large companies meeting higher thresholds |
| Required/Voluntary | Mandatory EU regulation | Mandatory EU directive |
| Geography | European Union (with extraterritorial reach) | European Union (with extraterritorial reach) |
| Key Focus | What you disclose — transparency through reporting | What you do — conduct through due diligence processes |
| Assurance | Mandatory limited assurance on reporting | Civil liability and regulatory enforcement on due diligence |
What is the CSRD?
The Corporate Sustainability Reporting Directive is the EU's comprehensive sustainability disclosure regulation. It requires in-scope companies to report on environmental, social, and governance topics under the European Sustainability Reporting Standards (ESRS), using a double materiality framework. The CSRD is fundamentally about transparency — companies must disclose their sustainability impacts, risks, governance, and targets so that investors and stakeholders can assess their performance.
The CSRD applies to approximately 50,000 companies, phased from 2024 through 2028, and covers any company meeting specified size thresholds (250+ employees, €50M+ revenue, or €25M+ assets), EU-listed companies, and qualifying non-EU companies. Reports must be assured, digitally tagged, and included in the management report.
What is the CSDDD?
The Corporate Sustainability Due Diligence Directive (also known as CS3D) was adopted by the European Parliament in April 2024 and requires in-scope companies to conduct human rights and environmental due diligence across their operations and value chains. Unlike the CSRD, which mandates what companies disclose, the CSDDD mandates what companies do — they must identify, prevent, mitigate, and account for adverse human rights and environmental impacts.
The CSDDD applies to a narrower set of companies than the CSRD: EU companies with 1,000+ employees and €450M+ worldwide net turnover, and non-EU companies with €450M+ net turnover generated in the EU. The phased implementation begins in 2027 for the largest companies (5,000+ employees, €1.5B+ turnover) and extends through 2029.
The directive's obligations include establishing and implementing a due diligence policy, identifying actual and potential adverse impacts, preventing and mitigating those impacts, providing remediation, engaging with affected stakeholders, establishing a complaints mechanism, monitoring effectiveness, and publicly communicating on due diligence. Companies must also adopt a climate transition plan aligned with the Paris Agreement's 1.5°C target.
Key Differences
1. Reporting vs Conduct
This is the fundamental distinction. The CSRD says: "Tell stakeholders about your sustainability performance, impacts, and risks." The CSDDD says: "Take action to prevent and address human rights and environmental harm in your value chain." The CSRD creates transparency obligations; the CSDDD creates behavioral obligations. A company can comply with CSRD through accurate disclosure of poor practices; the CSDDD requires the company to change those practices.
2. Scope and Thresholds
The CSRD captures approximately 50,000 companies with relatively lower thresholds (250+ employees). The CSDDD captures approximately 6,000 companies with significantly higher thresholds (1,000+ employees and €450M+ turnover). Every CSDDD-subject company will also be subject to CSRD, but most CSRD-subject companies will not face CSDDD obligations.
3. Enforcement Mechanism
CSRD non-compliance results in penalties related to inadequate or inaccurate disclosure, enforced by national competent authorities and auditors. The CSDDD introduces civil liability — affected persons can bring claims against companies that fail to fulfill their due diligence obligations, and companies can be held liable for damages resulting from inadequate due diligence. This civil liability provision is a fundamentally different enforcement mechanism than CSRD's disclosure-based penalties.
4. Value Chain Depth
Both directives address the value chain, but differently. The CSRD requires companies to report on value chain impacts and risks based on their materiality assessment. The CSDDD requires companies to actively conduct due diligence on their value chain — identifying risks, engaging suppliers, implementing corrective actions, and monitoring outcomes. The CSDDD's value chain obligations are operational, not just informational.
5. Climate Transition Plans
Both directives address transition plans, but with different force. Under CSRD (ESRS E1), companies must disclose their transition plan or explain why they don't have one. Under the CSDDD, companies must adopt and implement a transition plan ensuring their business model and strategy are compatible with the 1.5°C target. The CSDDD makes the transition plan an obligation; the CSRD makes disclosure of the plan an obligation.
6. Subject Matter Focus
The CSRD covers the full ESG spectrum — environmental, social, and governance — through ten topical ESRS standards. The CSDDD focuses specifically on human rights (aligned with international instruments including the ECHR, ICCPR, ICESCR, and core ILO conventions) and environmental impacts (covering climate, biodiversity, pollution, and other environmental harms). Governance topics like anti-corruption and business conduct are addressed by CSRD but not directly by the CSDDD.
7. Due Diligence Process Requirements
The CSDDD prescribes a specific due diligence process: policy adoption, impact identification, prevention and mitigation, remediation, stakeholder engagement, complaints mechanism, monitoring, and communication. The CSRD references due diligence through ESRS (particularly ESRS S1-S4 on workforce and affected communities) but does not mandate the same procedural requirements. The CSDDD is operationally more prescriptive.
Which One Do You Need?
CSRD applies based on size, listing status, and EU nexus at relatively lower thresholds. If you're a large EU company or a listed EU company, you're likely in scope. The obligation is disclosure.
CSDDD applies to fewer, larger companies. If you have 1,000+ employees and €450M+ worldwide turnover (or equivalent non-EU thresholds), you'll face due diligence obligations starting in 2027-2029.
Both apply to large companies meeting both sets of thresholds. In this case, the CSDDD's due diligence processes will generate the information and governance structures that feed CSRD disclosures — they are designed to work in tandem.
Can You Use Both?
They're designed as complementary parts of the EU's sustainability regulation framework. The CSDDD generates the due diligence activity; the CSRD reports on it. Companies subject to both should build integrated compliance systems where the due diligence process (CSDDD) produces data, findings, and outcomes that are then disclosed in the sustainability statement (CSRD).
The ESRS explicitly reference due diligence processes consistent with the CSDDD's requirements. ESRS S1-S4 (social standards) ask companies to describe their due diligence for workforce and value chain impacts — disclosures that map directly to CSDDD obligations. Organizations that implement robust CSDDD due diligence will find CSRD social disclosures straightforward to prepare.
Council Fire's Perspective
The CSRD and CSDDD represent two sides of the EU's approach to corporate sustainability: transparency and accountability. We see them as inextricable — good reporting requires good practice, and good practice should be transparent. Companies that treat these as separate compliance workstreams are missing the architecture.
Our practical advice is to start with the CSDDD's due diligence framework — identify your value chain risks, build stakeholder engagement processes, establish complaints mechanisms — and then let those activities feed your CSRD disclosures. Companies that have robust due diligence processes produce better sustainability reports with less incremental effort. Conversely, companies that focus only on CSRD reporting without the underlying due diligence practice will find themselves in a precarious position when CSDDD obligations arrive.
Frequently Asked Questions
If I'm only subject to CSRD (not CSDDD), do I need to do due diligence?
The ESRS reference due diligence as part of sustainability reporting, particularly in the social standards (S1-S4). While the CSRD doesn't impose the same procedural obligations as the CSDDD, the ESRS expect companies to describe their due diligence processes. Companies subject only to CSRD should still conduct meaningful due diligence to support credible disclosures, even if the formal CSDDD obligations don't apply.
Can CSDDD compliance help with CSRD reporting?
Absolutely. The due diligence processes required by the CSDDD — risk identification, stakeholder engagement, remediation tracking, monitoring — directly produce the information needed for CSRD social and environmental disclosures. Companies implementing CSDDD will find that much of the data and narrative content for ESRS S1-S4 (and relevant environmental standards) flows from their due diligence activities.
What's the civil liability risk under the CSDDD?
The CSDDD allows affected individuals and communities to bring civil claims against companies that fail to conduct adequate due diligence, resulting in harm. Companies can be held liable for damages caused by their own operations or by subsidiaries and business partners in their chain of activities where the company failed to prevent or mitigate the harm. This creates a fundamentally different risk profile than CSRD, where the consequence of non-compliance is regulatory penalties for inadequate disclosure.
How do the timelines interact?
CSRD is already in effect, with the first reports published in 2025 (for fiscal year 2024). The CSDDD phases in from 2027 (largest companies) through 2029. Companies subject to both should use their early CSRD reporting cycles to build the governance structures and data systems that will support CSDDD compliance when it arrives. Treating the CSRD years as preparation for CSDDD is a pragmatic approach.
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