Industry Insight: CSDDD – The New Era of Due Diligence for Global Supply Chains

As sustainability and ethical governance take centre stage in corporate responsibility, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) represents a monumental shift in expectations for large businesses operating in or with Europe. Unlike its reporting-focused counterpart, the CSRD, the CSDDD calls for real action; placing environmental and human rights responsibilities at the heart of business strategy and supply chain management.

While the directive will be phased in from 2027, the scale and complexity of the requirements make early preparation critical. The CSDDD applies to companies based in and outside the EU, provided they meet defined thresholds based on turnover, employee numbers, or their relationships via licensing or franchising. Crucially, it also affects non-EU companies, including many in the UK, with operations or clients within the EU.

Moving from Policy to Practice

The CSDDD demands more than intent; it requires proof. Businesses must embed human rights and environmental due diligence into their core operations, governance, and supply chains. This means identifying, preventing, and mitigating adverse impacts, and where needed, remediating harm.

While voluntary frameworks like the OECD Guidelines and UN Guiding Principles have helped shape best practice for years, the CSDDD makes this mandatory and enforceable. Failure to comply may result in litigation, substantial fines, and reputational damage. However, its purpose is not punitive. The directive is designed to raise standards across the board and encourage better, more sustainable ways of working.

Supply Chain Visibility and Risk Management

For many businesses, the greatest challenge will be supply chain transparency. Companies with complex or multi-tiered global suppliers may find it difficult to trace inputs back to source. Nonetheless, mapping risks, conducting due diligence, and setting measurable targets are vital steps in compliance—and in future-proofing the organisation.

From an operational perspective, this offers commercial as well as compliance advantages. Effective due diligence can uncover inefficiencies, identify material risks, and open opportunities for innovation and improved stakeholder trust. In this sense, sustainability becomes a lever for both risk reduction and value creation.

Implications for UK Businesses

Although the UK is no longer in the EU, many UK-based organisations will fall within the scope of the CSDDD due to their commercial ties. Furthermore, even where not directly affected, they may be required by EU clients or partners to demonstrate alignment with the directive’s requirements as a condition of doing business.

Proactive businesses are already leveraging existing governance and compliance frameworks, such as anti-bribery or health and safety, to accelerate their readiness. Others are adopting digital tools to map ESG risks and manage data at scale.

An Opportunity to Lead

At Inteb, we believe directives like the CSDDD reflect a wider market shift towards corporate responsibility, climate resilience, and ethical value chains. They’re not simply a compliance issue; they’re a strategic imperative.

The businesses that engage early, act decisively, and build transparency into their operations will be the ones that thrive in this new regulatory landscape. CSDDD may be the most significant sustainability regulation yet; but it’s also one of the most promising tools for building a better future.