One month after the Corporate Sustainability Due Diligence Directive (CSDDD) was pushed through the European Parliament with 374 “aye” votes, the landmark bill has officially been signed into law.
After more than two years of deliberation and debate, a recently re-tooled version of the legislation—which aims to hold corporations to responsible social and environmental standards across their global value chains—has been approved by the Council of the European Union.
“The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe,” the European Commission said Friday.
It has been a bumpy road for the CSDDD, which was nearly derailed in January after Germany pulled its support for the legislation over concerns about potential legal and bureaucratic impacts on corporations. Italy and France followed suit weeks later, upending the provisional agreement that the European Parliament waved through in December.
Over the ensuing months, the framework’s writers worked behind the scenes to adjust its language, landing on the version that the European Council’s Belgian presidency offered up in March.
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Requirements were revised and softened for smaller businesses; the mandate that parent companies with 500 or more employees and a net global turnover of 150 million euros ($160 million) comply with the rules was changed, for example, to apply only to companies with workforces over 1,000 and a net worldwide turnover of 450 million euros ($481 million).
Meanwhile, some downstream elements of the supply chain, including product disposal and activities carried out by indirect business partners, will be excluded from coverage by the law.
For affected enterprises, the tenets of the legislation include a requirement to implement risk-based systems to monitor, prevent or remediate violations of human rights and environmental impacts across their supply chains, subsidiaries and business partners. In the event that a violation is identified, the company must take appropriate action to address it or risk being held liable. They must also develop a climate transition plan in line with the Paris agreement on climate change.
“Large companies must take their responsibilities in the transition towards a greener economy and more social justice,” Belgian Deputy Prime Minister and Minister of the Economy and Employment Pierre-Yves Dermagne said Friday. “The Corporate Sustainability Due Diligence directive will give us the possibility to sanction those actors that violate their obligations. It is a concrete and significant step towards a better place to live for everyone.”
Following signatures from the President of the European Parliament and the President of the Council, the CSDDD will be published in the Official Journal of the European Union, taking effect 20 days after its publication. EU member states will have two years to implement changes to integrate the rules into their laws, and in 2026, the regulation will begin to roll out across the entire region, starting with the largest companies first.
“This is a defining moment for human rights and corporate accountability,” Hannah Storey, Amnesty International Policy Advisor on Business and Human Rights, said. “The EU has set a binding standard for responsible business conduct in the world’s biggest single market. Today’s immense achievement should send a message to all companies everywhere that they must respect human rights.”
Nele Meyer, director of the European Coalition for Corporate Justice, welcomed the hard-won social and environmental victory while acknowledging the need for constant vigilance in holding industry accountable.
“Despite its flaws, the CSDDD delivers a clear message: Europe will no longer tolerate profit-making at the expense of people and the planet,” she said. “This is a win for the countless workers and communities who have been fighting for corporate accountability for years. But let’s not sugarcoat this—the true test will be how well EU countries enforce these rules and close as many loopholes as possible.”