Corporate Sustainability Due Diligence Directive (CS3D)
Overview Summary
The Corporate Sustainability Due Diligence Directive (CS3D) requires in-scope companies to identify, prevent and mitigate actual or potential human‑rights and environmental impacts across their supply chains where impacts are most likely to occur. Companies can be held liable if they fail to fulfill their due diligence obligations.
The directive also requires companies to adopt and implement a climate change transition plan aligned with EU‘s 2050 climate-neutrality objective.
Scope of Coverage
The CS3D applies across all industries:
– A company’s own activities
– Subsidiaries
– Upstream value chain, including all direct and indirect suppliers
– Limited downstream activities such as distribution, transport and storage
Issues addressed:
– Human rights risks—including labour rights, child labour and forced labour
– Environmental impacts—including greenhouse gas emissions, resource use, hazardous waste and biodiversity loss
– Pollution—including marine and soil pollution and impacts on endangered species
Affected Entities
EU Companies
– More than 5,000 employees
– More than EUR 1,5 billion net worldwide turnover
Non‑EU Companies
– More than EUR 1,5 billion net turnover generated in the EU over the required reference peropd (typically two consecutive years)
Franchisors & Licensors (EU & Non-EU)
– A company is in scope if it:
• Earns > €22.5 million in royalties in the EU and
• Has > €80 million turnover in the EU
Indirect Impact on SMEs
While SMEs are not directly regulated, they are increasingly required to provide evidence and data to in‑scope business partners.
Applicability & Compliance Timeline
26 July 2028 → EU Member States must transpose the directive
26 July 2029 → CS3D applies to companies:
– Within the EU with more than 5,000 employees and a global net turnover of more than €1.5 billion
– Outside the EU with a turnover of more than €1.5 billion in the EU
What This Means for Companies
Companies will need clear visibility into their supply‑chain risks, consistent evidence of due diligence actions and a credible transition plan aligned with 1.5°C pathways.
Meo Carbon Solutions supports organizations by mapping risks, strengthening supplier engagement and building practical due diligence systems that meet CS3D requirements.
Status
Adopted
- *Subject to changes under the EU Omnibus simplification package adopted in late 2025, which adjusted scope thresholds and delayed certain timelines.