EU Adopts CSDDD Covering 5,500 Companies With Compliance From 2027

The European Parliament has adopted the EU Corporate Sustainability Due Diligence Directive (CSDDD), requiring approximately 5,500 companies to implement due diligence processes for human rights and environmental impacts across their operations and value chains, with the first compliance phase beginning in 2027. The scope is significantly reduced from the originally proposed 16,000 companies following negotiations.

The CSDDD applies to EU companies with more than 1,000 employees and a global net turnover of at least EUR 450 million, and to non-EU companies generating more than EUR 450 million in net EU turnover. Compliance is phased by workforce size: companies with over 5,000 employees and EUR 1.5 billion in turnover must comply from 2027; those with over 3,000 employees and EUR 900 million in turnover from 2028; and companies with over 1,000 employees and EUR 450 million in turnover from 2029. The directive requires companies to adopt and implement a climate mitigation transition plan compatible with the 1.5°C Paris Agreement pathway.

The CSDDD's transition planning requirements are aligned with those of the Corporate Sustainability Reporting Directive, ensuring companies do not face double reporting obligations. Required elements include timebound five-year intermediate targets from 2030 to 2050 covering Scope 1, 2, and where appropriate Scope 3 GHG emissions, key planned activities toward target achievement, financial aspects, and governance information. CDP data indicates that over half of companies already have climate transition plans in place, and over 1,000 companies in the EU link executive remuneration to sustainability goals — though the Council removed the requirement to link directors' pay to long-term planning during negotiations.

CDP is already working with 78 large EU companies to address climate impacts in supply chains, with these companies requesting environmental information from over 15,000 companies globally, of which more than 8,000 ultimately disclose through CDP. For Indian companies supplying to EU buyers, the CSDDD's supply chain due diligence requirements create a clear compliance imperative. Indian manufacturers in sectors including textiles, automotive, and chemicals face pressure to demonstrate credible emissions data, human rights due diligence, and climate risk management to retain access to European supply chains as the directive enters force.

Key figure — 5,500 companies in scope under the adopted CSDDD