The EU Directive on Corporate Sustainability Due Diligence (CS3D) is an important piece of legislation that requires both EU and non-EU companies to conduct environmental and human rights due diligence throughout their operations, subsidiaries and supply relationships.

The Directive aims to incentivise sustainable and responsible corporate behaviour by integrating human rights and environmental concerns into management practices and governance structures. The rationale behind the regulation is that third countries may not implement regulatory standards properly, despite being bound by international law to do so.

To address this issue, the CS3D holds companies operating in the EU accountable for their suppliers’ potentially illegal activities. The scope and cost of the CS3D Directive have both been the subject of intense debate. The amendments contained in the Omnibus package aim to reduce compliance costs. The package mainly focuses on tier-one suppliers to the largest companies, reduces fines for non-compliance and opts for decentralised implementation. […]

G. Felbermayr, K. Friesenbichler, M. Gerschberger, B. Meyer, P. Klimek, EU Supply Chain Regulations Between Efficiency and Effectiveness, Intereconomics 60(3) (2025) 165-169.