How does CSDDD differ from Germany's LkSG?

CSDDD is broader than LkSG in several ways: it covers environmental impacts more extensively (including climate change), it introduces civil liability (LkSG does not), it requires climate transition plans, it covers the full value chain (not just direct suppliers), and it will apply across all EU member states. Companies complying with LkSG will have a head start but need to expand their programs for CSDDD.

When does CSDDD take effect?

CSDDD was adopted in 2024 and member states have until 2026 to transpose it into national law. Phase-in: companies with 5,000+ employees and €1.5B turnover from 2027; 3,000+ employees and €900M from 2028; 1,000+ employees and €450M from 2029. Non-EU companies meeting EU revenue thresholds are covered from 2029.

Does CSDDD create civil liability?

Yes. CSDDD introduces civil liability for companies that fail to prevent adverse impacts through adequate due diligence. Affected persons can bring claims before EU courts for compensation. This is a significant departure from the German LkSG, which explicitly excluded civil liability, and creates direct legal exposure for companies and their directors.

Corporate Sustainability Due Diligence Directive (CSDDD)

What Is CSDDD?

The Corporate Sustainability Due Diligence Directive (CSDDD, also known as CS3D), adopted by the EU in 2024, requires large companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts in their operations and value chains. It builds on existing national legislation (Germany's LkSG, France's Duty of Vigilance) but is broader in scope and introduces EU-wide civil liability.

CSDDD represents a fundamental shift in corporate accountability — companies are legally responsible not just for their own impacts but for adverse impacts throughout their chains of activities.

Who It Applies To

Phase-in based on size:

Phase	Year	Employees	Turnover
Phase 1	2027	5,000+	€1.5B+
Phase 2	2028	3,000+	€900M+
Phase 3	2029	1,000+	€450M+

Non-EU companies: Companies from outside the EU with net turnover exceeding the relevant thresholds generated in the EU are also covered from 2029.

Key Requirements

Due diligence obligations (six-step process):

Integrate due diligence into policies: Adopt and implement a due diligence policy describing the company's approach, code of conduct, and processes
Identify and assess impacts: Map actual and potential adverse human rights and environmental impacts in own operations, subsidiaries, and the chain of activities (business partners)
Prevent, mitigate, and end impacts: Take appropriate measures to prevent potential impacts and end or minimize actual impacts. This includes developing corrective action plans, seeking contractual assurances, making investments, and providing targeted support to business partners
Monitor effectiveness: Track due diligence implementation and effectiveness through qualitative and quantitative indicators
Communicate: Publicly report on due diligence through annual statements
Provide remediation: Provide remediation where the company has caused or contributed to adverse impacts, including financial compensation, rehabilitation, and engagement with affected stakeholders

Climate transition plan: Companies in scope must adopt and implement a transition plan for climate change mitigation aligned with the Paris Agreement's 1.5°C target, including emission reduction targets, decarbonization levers, and planned investments.

Covered impacts:

Human rights impacts as defined in international instruments (UN Guiding Principles, ILO conventions, international human rights law)
Environmental impacts including climate change, biodiversity loss, pollution, water degradation, and deforestation

Timeline

2024: CSDDD adopted
2026: Member states must transpose into national law
2027: Phase 1 companies begin compliance
2028: Phase 2 companies begin
2029: Phase 3 companies and non-EU companies begin
Ongoing: Regular review and potential expansion of scope

Civil Liability

CSDDD introduces a civil liability regime:

Companies are liable for damages caused by failure to comply with due diligence obligations
Affected persons (including individuals and communities anywhere in the world) can bring claims before courts in EU member states
Trade unions and NGOs can bring actions on behalf of affected persons
Limitation period of at least 5 years from when the damage occurred
Courts can order companies to take appropriate measures to cease the infringement

This creates significantly more legal exposure than existing national laws like Germany's LkSG.

Compliance Steps

Scope assessment: Determine which entities and business relationships are covered
Policy development: Adopt a comprehensive due diligence policy
Value chain mapping: Map your chain of activities to identify actual and potential adverse impacts
Impact assessment: Conduct regular human rights and environmental impact assessments
Prevention and mitigation: Implement measures to prevent and mitigate identified impacts
Grievance mechanism: Establish or strengthen complaints procedures
Climate transition plan: Develop a Paris-aligned transition plan with emission reduction targets
Monitoring and reporting: Track effectiveness and publish annual due diligence statements

Penalties

Administrative penalties: Up to 5% of the company's worldwide net turnover
Civil liability: Compensation claims from affected persons
Director duties: Directors must consider human rights, climate, and environmental consequences in their duties
Public procurement: Non-compliant companies may be excluded from public contracts
Supervisory authority enforcement: National authorities can investigate, impose fines, and require corrective measures

How Council Fire Can Help

Council Fire helps companies prepare for CSDDD compliance — from value chain mapping and impact assessment through policy development, transition planning, and remediation frameworks. Contact us for CSDDD compliance support.