CSDDD (Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024) on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 also known as EU Supply Chain Law has entered into force on July 25, 2024 and has to be implemented in national regulation on July 26, 2026 at the latest.

CSDDD requires companies to ensure human rights and environmental protection throughout their global value chains.

Companies will have to conduct due diligence on the adverse impacts of their actions to foster responsible corporate behavior.

Article 2 of CSDDD provides that CSDDD shall apply to companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions:

1. the company had more than 1 000 employees on average and had a net worldwide turnover of more than EUR 450 000 000 in the last financial year for which annual financial statements have been or should have been adopted;
2. the company did not reach the thresholds as referred to in point (a) but is the ultimate parent company of a group that reached those thresholds in the last financial year for which consolidated annual financial statements have been or should have been adopted;
3. the company entered into or is the ultimate parent company of a group that entered into franchising or licensing agreements in the Union in return for royalties with independent third-party companies, where those agreements ensure a common identity, a common business concept and the application of uniform business methods, and where those royalties amounted to more than EUR 22 500 000 in the last financial year for which annual financial statements have been or should have been adopted, and provided that the company had or is the ultimate parent company of a group that had a net worldwide turnover of more than EUR 80 000 000 in the last financial year for which annual financial statements have been or should have been adopted.

CSDDD shall also apply to companies which are formed in accordance with the legislation of a third country and fulfil one of the following conditions

1. the company generated a net turnover of more than EUR 450 000 000 in the Union in the financial year preceding the last financial year;
2. the company did not reach the threshold as referred to in point (a) but is the ultimate parent company of a group that on a consolidated basis reached that threshold in the financial year preceding the last financial year;
3. the company entered into or is the ultimate parent company of a group that entered into franchising or licensing agreements in the Union in return for royalties with independent third-party companies, where those agreements ensure a common identity, a common business concept and the application of uniform business methods, and where those royalties amounted to more than EUR 22 500 000 in the Union in the financial year preceding the last financial year; and provided that the company generated, or is the ultimate parent company of a group that generated, a net turnover of more than EUR 80 000 000 in the Union in the financial year preceding the last financial year.

Where the ultimate parent company has as its main activity the holding of shares in operational subsidiaries and does not engage in taking management, operational or financial decisions affecting the group or one or more of its subsidiaries, it may be exempted from carrying out the obligations under the CSDDD if certain conditions are met.