Navigating the Corporate Sustainability Due Diligence Directive (CS3D)

Introduction

The Corporate Sustainability Due Diligence Directive (CS3D) aims to ensure companies are accountable for monitoring and managing their impact on human rights and the environment. If the acronym sounds familiar, that’s because CS3D works hand in hand with the Corporate Sustainability Reporting Directive (CSRD). While CSRD focuses on transparency and reporting, CS3D takes a step further by requiring companies to actively manage and mitigate risks related to human rights and the environment. 

What is CS3D aspiring to do?

CS3D is designed not only to ensure large companies report their sustainability risks, but also actively take responsibility for their impact. By enforcing accountability throughout the supply chain, the directive aims to create a more responsible global business environment. 

Who is impacted and key deadlines 

CS3D applies to EU and non-EU companies that meet the following thresholds

• EU and Non-EU companies with over 1,000 employees 

• EU companies with over €450 million EUR in worldwide turnover (Turnover is the total money a company makes from selling its goods or services before any costs are subtracted) 

• Non-EU companies with over €450 million EUR turnover generated in the EU

What does CS3D require from companies? 

• Identify and assess risks: Conduct thorough due diligence on both direct and supply chain impacts on human rights and the environment. 

• Integrate due diligence into corporate policies: Establish governance systems that reflect these sustainability considerations. 

• Monitor and report actions: Regularly track the effectiveness of efforts to prevent or mitigate risks and report findings to stakeholders. 

• Remediate harm: Provide remedies for individuals and communities affected by adverse business activities. 

• Develop a climate transition plan: Ensure the company’s business model aligns with the Paris Agreement’s climate goals. 

How to get started

1. Assess the current state: Conduct a comprehensive assessment of current human rights and environmental due diligence practices. 

2. Develop a transition plan: Create a roadmap for how your company will comply with CS3D requirements, building out a transition plan now, even before official guidelines are released to ensure a smooth and timely compliance process. 

3. Stay informed: The European Commission is expected to release detailed implementation guidelines for CS3D in 2026. Keeping up to date will be critical in understanding specific compliance expectations (sign up for our newsletter, and we’ll keep you in the loop!).

Our recommendation 

Establishing open lines of communication with your suppliers can take time and careful coordination, we suggest starting early! By building strong supplier relationships now, you’ll ensure better access to the data required for future disclosures, enabling a smoother compliance process when reporting deadlines approach. 

Where Bespoke ESG can support

Every business is unique, and at Bespoke ESG, we understand that one-size-fits-all solutions rarely work when it comes to sustainability. Whether you need to assess your supply chain risks or develop a comprehensive climate transition plan, we design a customized approach that fits the specific needs of your company, ensuring compliance with CS3D while driving sustainability goals forward.

Disclaimer: The information provided in this document is for general informational purposes only and does not constitute legal advice. Regulatory advice is provided solely within the scope of contracts between Bespoke ESG and its clients.