Eu Corporate Sustainability Due Diligence Directive (CSDDD)
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Compliance is not merely a challenge; it is a crucial opportunity to establish a trustworthy green supply chain and win the trust of the international market.
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What is CSDDD?
The CSDDD, short for Corporate Sustainability Due Diligence Directive, is a mandatory action framework imposed by the EU requiring companies to identify, prevent, and rectify human rights and environmental risks in their supply chains while bearing legal responsibilities. This directive requires enterprises to systematically identify, prevent, mitigate and terminate the adverse impacts on human rights and the environment in their business activities (including the upstream and downstream of the value chain), and establish corresponding governance mechanisms and review procedures. Since the CSDDD officially came into effect, the EU and large enterprises operating in the EU will gradually be required to conduct sustainable due diligence and regularly disclose the fulfillment of their due diligence obligations. Those who fail to meet the requirements will face heavy fines and legal accountability.
Which companies does CSDDD cover?
CSDDD adopts a progressive implementation approach, gradually covering the following enterprises in phases:
– July 26, 2027: Applicable to EU and non-EU enterprises with more than 5,000 employees and global turnover of more than 1.5 billion euros;
– July 26, 2028: Applicable to EU and non-EU enterprises with more than 3,000 employees and global turnover of more than 900 million euros;
– July 26, 2029: Applicable to EU and non-EU enterprises with more than 1,000 employees and global turnover of more than 450 million euros. Recently, the European Union issued a simplified directive, postponing the implementation time of the first phase of the CSDDD (covering the largest companies) by one year.
What is the relationship between CSRD and CSDDD?
CSRD focuses on “transparency” : compelling enterprises to disclose key data such as carbon emissions and biodiversity. CSDDD emphasizes “action” : It requires enterprises to identify supply chain risks and formulate rectification plans. The data disclosed by CSRD provides a basis for the risk assessment of CSDDD, and the implementation effect of CSDDD is made transparent to the stakeholders through CSRD.
What difficulties do enterprises face in achieving CSDDD compliance?
The understanding of regulations and compliance are highly challenging
The directives cover multiple dimensions of issues such as the environment, human rights, labor, and climate, making the compliance path complex. Companies within the scope must formulate climate transition plans to ensure that their business strategies align with the Paris Agreement’s goal of “limiting the global average temperature rise to within 1.5°C” and other objectives. Enterprises urgently need dual professional support in both law and ESG.
Insufficient transparency of the supply chain
Large enterprises have long supply chains and complex hierarchies, making it difficult to identify potential risks in the upstream and downstream. Data deficiency and information silos are widespread. In high-risk industries such as the textile industry, the data barriers for suppliers are high, making it difficult to trace the relevant data of suppliers.
Weak due diligence capabilities
Most enterprises have not yet established a systematic due diligence mechanism, and they lack internal resources and methodologies.
The compliance cost and legal liability risk are high
Failure to fulfill due diligence obligations will result in civil compensation and regulatory penalties, affecting the company’s reputation and sustainable credit rating.
Our professional services
From regulatory interpretation to supply chain governance, a one-stop CSDDD compliance solution
Regulatory interpretation and compliance path design
Sort out the applicable subjects, responsibilities and obligations, as well as key time nodes of CSDDD. Evaluate the CSDDD compliance of enterprises, accurately identify strengths, weaknesses, and current gaps, and formulate personalized compliance roadmaps.
Establishment of risk identification and due diligence mechanisms
Identify high-risk links in the business chain and supply chain, establish mechanisms for identifying, assessing, recording and responding to environmental and human rights risks, and prevent and eliminate key problems.
Supply chain data research and transparency improvement
Support enterprises in conducting due diligence on primary and secondary suppliers; Provide traceable data management tools to enhance the visibility of the value chain.
Support for the writing and review of disclosure reports
Assist enterprises in preparing due diligence reports and annual accountability disclosures, output clear, audit-friendly, and publicly disclodable materials and reports, and enhance the credibility and competitiveness of enterprises in the international market; Provide third-party review and audit response services.
Our advantages
Data advantage
Intelligently match carbon accounting methodologies, automatically adapt to the optimal declaration plan, and reduce the compliance costs of enterprises.
Technical advantage
Self-developed carbon accounting AI engine, automated accounting process, and dynamically optimized enterprise carbon emission accounting model.
Ecological advantage
Covering 26 types of regulations such as CBAM/CSRD/ battery passports, it is compatible with the entire industrial chain scenarios of multiple industries.
Security guarantee
Blockchain + industrial Internet of Things data channel, achieving full lifecycle protection of data.
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