Today (24th May 2024) the EU Supply Chain Act (officially: Corporate Sustainability Due Diligence Directive, CSDDD) was finally passed by the Council of the EU. The EU states now have two years to implement the directive into national law.

The CSDDD gradually applies to companies of different sizes in the EU:

  • It starts in five years with companies with 5,000 or more employees and a turnover of over 1.5 billion euros.
  • After six years, the CSDDD applies to companies with 3,000 employees or more and a turnover of 900 million euros
  • After seven years for companies with 1,000 employees or more and a turnover of 450 million euros

The Supply Chain Act Initiative has put together a few points in which the CSDDD stands out – also compared to the existing LkSG.

In principle, it is very welcome that the CSDDD represents a paradigm shift from voluntary commitments by companies to binding requirements regarding compliance with human rights and environmental/climate protection. With the CSDDD, companies must now carry out a risk assessment of their supply chains and take remedial measures if there are negative impacts on human rights and the environment.

Unlike the LkSG, the CSDDD includes the entire supply chain from the outset, including suppliers such as quarries and mines. When companies identify risks in their supply chains, these must be weighted and addressed as a priority depending on their severity. If, in addition to the risks, it is determined that damage has already been primarily caused by the company and has occurred, then the company must make reparation.

Compared to the LkSG, the CSDDD also covers more human rights and environmental protection criteria: e.g. the right to life and freedom of thought, as well as the right to food, clothing and sanitary facilities. Conversely, the CSDDD puts small and medium-sized enterprises (SMEs) in a better position than under the LkSG, since it requires that access to training and financial support are provided if necessary. Accordingly, large companies are not allowed to pass on reporting obligations to SMEs. Unlike the LkSG, the CSDDD gives those affected the opportunity to sue companies that cause damage under civil law for damages.

What is negative about the CSDDD is that initially only companies with 5,000 or more employees are covered by the directive and that there is a long transition period until companies (of different sizes) have to comply with the directive. It is important here that the German federal government must not fall behind the German LkSG when implementing the directive, which already applies to 1,000 employees and without restriction to a minimum turnover. However, Article 1 Paragraph 2 of the CSDDD applies here, which stipulates that existing protection of human rights and the environment may not be weakened through the implementation of the CSDDD.

For a detailed assessment by the Supply Chain Act Initiative, see here:

“Was liefert das EU-Lieferkettengesetz? Kurzbewertung der EU-Lieferkettenrichtlinie (CSDDD)”