The EU Corporate Sustainability Due Diligence Directive is final: how can companies prepare?

Member States must now adopt and publish laws, regulations and administrative provisions necessary to transpose the CS3D into national laws by July 26, 2026. The national measures are to start applying in phases, commencing in July 2027, July 2028 or July 2029.

The CS3D is groundbreaking in two significant respects. First, it introduces mandatory human rights and environmental due diligence across EU and non-EU companies’ worldwide “chains of activities” (as defined in the CS3D), moving away from the voluntary nature of such due diligence. Second, it requires companies to “adopt and put into effect” a climate transition plan, which goes beyond the requirements under the International Sustainability Standard Board’s (ISSB) global baseline standard and the EU Corporate Sustainability Reporting Directive (CSRD) to disclose a plan if the entity has one.

Companies can face a range of adverse consequences for non-compliance, including regulatory investigations and enforcement, complaints/regulatory submissions by concerned persons, hefty pecuniary penalties, and challenges with contractual award and performance. Additionally, the CS3D provides that in cases of breach of due diligence obligations, companies may face civil liability claims.

It remains to be seen whether, and in what specific areas, Member States will introduce more stringent provisions that go beyond the requirements of the CS3D.

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