CSDDD Due Diligence Checklist: 8 Steps to Compliance

The Corporate Sustainability Due Diligence Directive (CSDDD) establishes a legally enforceable framework for companies to proactively manage risks related to human rights abuses and environmental harm in their supply chains. By following this 8-step checklist, compliance officers can ensure their organisation meets all obligations under Directive (EU) 2024/1760, avoiding penalties of up to 5% of global net turnover and potential civil liability for damages.

This guide covers the precise scope, obligations, deadlines, and enforcement mechanisms of the CSDDD, providing a practical roadmap for compliance that integrates seamlessly with related EU legislation such as the Corporate Sustainability Reporting Directive (CSRD) and complements supply chain transparency efforts (Supply Chain Transparency).

Who Must Comply with the CSDDD?

The directive applies to:

• EU companies with 1,000 or more employees and an annual turnover exceeding €450 million.
• Non-EU companies generating at least €450 million in net turnover within the EU market.

These thresholds are cumulative and apply to consolidated group figures. The directive phases in starting 1 January 2027, with full enforcement from 1 January 2028.

Exact Obligations Under the CSDDD

Companies subject to the directive must:

1. Establish and implement a due diligence strategy covering actual and potential adverse human rights and environmental impacts.
2. Integrate due diligence into corporate policies and procurement practices.
3. Identify and assess risks in their own operations and value chains.
4. Prevent or mitigate identified risks.
5. Bring actual adverse impacts to an end and provide remediation where the company caused or contributed to harm.
6. Establish accessible grievance mechanisms for affected stakeholders.
7. Monitor and report annually on due diligence measures and their effectiveness.

Failure to comply can result in administrative fines of up to 5% of global net turnover and civil liability for damages caused by non-compliance.

8-Step CSDDD Due Diligence Checklist

1. Map Your Value Chain
   Identify all direct and indirect suppliers, subcontractors, and business partners across your entire value chain. This includes upstream raw material providers and downstream distributors.
2. Identify Actual and Potential Adverse Impacts
   Use the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights as authoritative references to detect risks related to forced labour, child labour, environmental pollution, biodiversity loss, and other harms.
3. Prioritise Impacts by Severity and Likelihood
   Assess risks based on their scale, scope, irremediability, and probability of occurrence to focus resources on the most critical issues.
4. Prevent Potential Impacts
   Integrate due diligence requirements into procurement contracts, supplier codes of conduct, and purchasing practices to proactively avoid harm.
5. Bring Actual Impacts to an End
   If your company caused or contributed to an adverse impact, implement remediation measures. If impacts are caused by business partners, use your leverage to stop the harm.
6. Establish a Grievance Mechanism
   Create an accessible, confidential, and effective channel for affected stakeholders to report concerns and seek remedy.
7. Monitor Effectiveness Annually
   Conduct regular reviews of your due diligence processes to ensure they remain effective and adapt to emerging risks.
8. Communicate Publicly
   Publish annual reports on your due diligence activities as required under Directive (EU) 2024/1760, which will feed into your CSRD sustainability reporting obligations.

Key Deadlines, Scope, and Penalties Comparison

Practical Compliance Checklist

• ✔ Complete a comprehensive value chain map including tier 1 and tier 2 suppliers.
• ✔ Conduct risk assessments referencing OECD and UN frameworks.
• ✔ Develop and implement supplier codes of conduct incorporating due diligence criteria.
• ✔ Embed due diligence clauses into procurement contracts.
• ✔ Establish a confidential grievance mechanism accessible to all stakeholders.
• ✔ Train procurement and compliance teams on CSDDD requirements.
• ✔ Set up annual monitoring and internal audits of due diligence effectiveness.
• ✔ Prepare and publish an annual due diligence report aligned with CSRD standards.

Integrating CSDDD Compliance with Related EU Legislation

Compliance with the CSDDD complements obligations under the Corporate Sustainability Reporting Directive (CSRD), which requires transparent sustainability disclosures. Additionally, supply chain transparency efforts (Supply Chain Transparency) support the identification and mitigation of risks mandated by the CSDDD. For a detailed overview of the directive itself, visit our CSDDD Regulation page.