BREAKING NEWS: Final Text of CS3D Published in EU Official Journal

The Official Journal of the European Union has published the final text of the Corporate Sustainability Due Diligence Directive (CSDDD or “CS3D”). This marks the final stage before CS3D enters into force twenty days after publication. EU member states now have until 26 July 2026 to publish laws, regulations, and administrative provisions required to comply with the Directive.

CS3D applies to EU companies with at least 1,000 employees and over 450 million euros in turnover, and to non-EU companies active in the EU market with over 450 million euros in turnover.

The intention of CS3D is to ensure organizations conduct due diligence to identify and address the potential for negative impacts on human rights and the environment, both in their own operations and along their supply chains. These six steps are defined by the Guidance for Responsible Business Conduct as follows:

1. Integrating due diligence into policies and management systems.
2. Identifying and assessing adverse human rights and environmental impacts.
3. Preventing, ceasing, or minimizing actual and potential adverse human rights and environmental impacts.
4. Monitoring and assessing the effectiveness of measures.
5. Communicating.
6. Providing remediation.

CS3D will have a scaled timeline of three phases:

• Phase 1: 2027. Organizations with 5,000+ employees and 1.5 billion euros in turnover
• Phase 2: 2028. Organizations with 3,000+ employees and 900 million euros in turnover.
• Phase 3: 2029. Organizations with 1,000+ employees and 450 million euros in turnover.

Organizations not in compliance with CS3D can be subject to penalties imposed by the national authorities of the member states, including fines up to 5 percent of worldwide turnover, with the potential for higher fines at the discretion of member states, and injunctive measures such as ceasing activities or undertaking remediation.

For Cassidy Spencer, Sustainability Regulatory Research Analyst at 3E, the phased implementation is an effective approach for such a significant directive. “It ensures a gradual yet firm approach by targeting the largest entities first,” says Spencer. “By mandating due diligence for companies with such a large workforce, the directive not only aims to identify and mitigate adverse human rights and environmental impacts, but also to embed sustainability into the core operational strategies of these businesses.”

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