CSDDD: What next for UK businesses?
8 April
It has been a long and rocky road. When the Corporate Sustainability Due Diligence Directive was first proposed back in 2022, many businesses – in the UK and beyond – began preparing.
Gap analyses were commissioned, procurement teams were briefed, and supply chain mapping projects were launched. There was a sense that this was the moment the EU would turn responsible business from a good intention into a legal obligation.
Four years later, the CSDDD has finally crossed the line – but it looks very different from the legislation many had been preparing for.
Article by Louise Herring, Director, Inherently Human
What actually happened?
In February 2025, the European Commission opened what it called an ‘Omnibus simplification package’ – a sweeping review of EU sustainability legislation aimed at reducing the burden on businesses and boosting European competitiveness. What followed was a bruising series of negotiations that culminated, in December 2025, with the European Parliament approving a substantially watered-down directive. EU member states gave their final approval in late February 2026.
The changes are significant. The CSDDD’s scope has been cut by around 70%. Where the original directive would have applied to companies with more than 1,000 employees and €450 million in global turnover, it now only covers those with more than 5,000 employees and €1.5 billion. The EU-wide civil liability regime – which would have given victims of corporate abuse a legal pathway to seek redress through EU courts – has been removed. Mandatory climate transition plans are gone. Maximum fines have been capped at 3% of global turnover. And compliance has been pushed out to July 2029, with member states given until July 2028 to transpose the directive into national law.
It’s fair to say that many in the human rights and sustainability world are disappointed. The European Coalition for Corporate Justice called it ‘the first major file pushed through via an EPP–far right alliance.’ Civil society organisations who spent years fighting for a robust law are rightly frustrated. The UN Working Group on Business and Human Rights warned that the changes misalign with the UN Guiding Principles. The EU Ombudsman named aspects of the process ‘maladministration.’
And yet – the CSDDD does now exist. For the first time, large multinational companies operating in the EU will be legally required to identify, prevent, and address human rights and environmental abuses across their supply chains. The risk-based approach to value chain due diligence survives. A review clause allows for scope expansion by 2031. Some national governments may go further in transposition than the minimum the directive requires.
So what does this mean for UK businesses?
The honest answer is – it’s complicated, and for many businesses the immediate direct impact is smaller than it looked a few years ago.
The CSDDD applies to non-EU companies that generate more than €1.5 billion in EU turnover. Unless your business meets that threshold, you’re not in scope of the directive as a primary obligation. Most UK SMEs and mid-sized businesses will not be caught directly.
However, many UK businesses will find themselves in the supply chains of companies that are. If your customers include large EU multinationals, you will increasingly be asked to demonstrate that your operations and supply relationships meet acceptable human rights and environmental standards. The directive explicitly limits how much information large companies can demand from smaller suppliers, which offers some protection from burdensome questionnaires. But the direction of travel is clear: due diligence expectations will flow down supply chains, whether or not you’re formally in scope.
There’s also the question of the UK’s own regulatory environment. The Modern Slavery Act remains on the statute books, though its enforcement has been widely criticised as inadequate. The current government has shown some appetite for strengthening supply chain legislation, but the UK has no equivalent to the CSDDD in prospect. For businesses trading into the EU, that regulatory gap will become increasingly visible – and commercially relevant. Our partner organisation the Ethical Trading Initiative is doing a lot of interesting work with government in this space to level the legislative playing field.
The case for pressing on regardless
Here’s what we see in our work with businesses across the human rights and ethical trade space: the companies getting genuinely tangled up in the legislative noise are often the ones who were only ever doing this for compliance reasons. The businesses who are in the best shape – and who are best positioned for whatever the regulatory landscape looks like in five years – are the ones who started from a different premise. They asked not ‘what do we have to do?’ but ‘what should we be doing?’
The Omnibus changes do not alter the underlying need for businesses to tackle exploitation and ensure decent work is being provided in their own operations and supply chains. They don’t change the fact that forced labour, unsafe working conditions, and environmental destruction are real and ongoing harms. They don’t change what investors, customers, and future employees increasingly expect of the businesses they back and buy from.
The direction of travel – towards greater corporate accountability, greater transparency, greater responsibility – is not going to reverse.
The CSDDD is weaker than it should be, and that is a real loss for the people it was designed to protect. But it is not the end of the story. National governments can still strengthen it in transposition. Businesses can influence that transposition through the current consultation on the guidance from the EU (feedback due by 24th July 2026). A review in 2031 could expand scope. Other jurisdictions are watching and legislating. The German Supply Chain Act, the Norwegian Transparency Act, the French Duty of Vigilance law, the Australian Modern Slavery Act – the global patchwork of due diligence requirements is only getting more complex, not less.
What we’re seeing on the ground
What gives me real optimism is what we’re seeing with our clients. By and large, the businesses we work with aren’t waiting for legislative certainty. They’re cracking on. They’re mapping their supply chains, building relationships with suppliers, understanding their human rights risks, and putting in place the systems and processes they know they’ll need.
Some of that is pragmatic – they know their customers will come knocking and their legal teams will want to work with them on their approach. Some of it is reputational – they understand the cost of being caught out. But for some of them, it’s simpler than all that: they believe it’s the right thing to do, and they’re not prepared to let regulatory uncertainty become an excuse for inaction.
The businesses that emerge strongest from this period of legislative confusion will be the ones who kept building – who treated due diligence as a way of doing business that reflects their values and protects the people in their supply chains, rather than a compliance exercise waiting to be triggered by a directive.
The CSDDD may have been watered down. But the case for responsible business has not.
