CSDDD

What it means

CSDDD is the EU directive on corporate sustainability due diligence. It requires large companies to identify, prevent and mitigate adverse impacts on human rights and the environment, not only in their own operations but across the chain of their business partners.

It applies to the largest EU companies and to non-EU companies with large turnover in the Union. Following the Omnibus simplification package the application dates have moved and the scope of obligations has narrowed, so the current text and its transposition into Slovak law need to be followed.

It includes a transition plan compatible with climate targets, a complaints mechanism and regular assessment of the measures taken. Unlike CSRD, which deals with reporting, CSDDD is about actual conduct and carries sanctions and civil liability.

How it works in practice

The directive does not bind small and medium-sized companies directly, but it reaches them indirectly. A large customer has to vet its suppliers, so it asks them for declarations, questionnaires, a code of ethics, contract clauses and sometimes a supplier audit.

It helps to be ready for such requests in advance: to have risks mapped as part of risk management, basic data on employees, workplace safety and the carbon footprint, and to be able to back them up. The voluntary VSME standard is a good framework from which most customers can be answered.

In practice the complaints mechanism is often combined with an existing system under the whistleblowing rules. Those who already have one extend it to reports from outside, for example from suppliers’ workers or local communities.

What to watch out for

Contract clauses sent by a large customer tend to be one-sided, passing obligations, audits at the supplier’s expense and contractual penalties down the chain. They deserve the same careful reading as trading terms before signing, because a breach can cost the customer.

Untrue or overstated answers in questionnaires are a risk in themselves. If it turns out the company claimed procedures it does not have, the customer may terminate the contract and the company faces reputational and legal risk. We therefore prefer to state less but verifiably, in line with the company’s compliance and ESG policy.