Due Diligence
Definition
In EU sustainability law, due diligence refers to a company's obligation to systematically identify, assess, prevent, mitigate, and account for adverse impacts on human rights and the environment across its operations and supply chains. It is not a one-time check — it is an ongoing process embedded in corporate risk management. Two EU laws make due diligence legally binding: the CSDDD and the EUDR.
CSDDD: Corporate Sustainability Due Diligence Directive
The Corporate Sustainability Due Diligence Directive (CSDDD) — Directive (EU) 2024/1760 — creates the most comprehensive EU due diligence obligation. The scope was significantly narrowed by the Omnibus Directive (EU) 2026/470:
In scope (post-Omnibus):
- EU companies: more than 5,000 employees AND more than €1.5 billion net turnover
- Non-EU companies: more than €1.5 billion net turnover generated in the EU
Phase 1 compliance start: 26 July 2029
Core obligations under CSDDD:
- Integrate due diligence into corporate policies and risk management systems
- Identify adverse human rights and environmental impacts in own operations, subsidiaries, and business partner chain
- Prevent, mitigate, or bring adverse impacts to an end
- Establish grievance mechanisms for affected people
- Monitor effectiveness of due diligence measures
- Report publicly (aligned with CSRD)
Post-Omnibus, companies must conduct a "scoping exercise" to prioritise the most likely and severe impacts, rather than comprehensive supply chain mapping.
EUDR: supply chain deforestation due diligence
The EUDR (Regulation (EU) 2023/1115) requires a more specific form of due diligence for operators placing certain commodities on the EU market. Before placing products on the market, operators must collect supply chain data (GPS coordinates, certifications), assess deforestation risk, and submit a due diligence statement. See EUDR for detail.
Due diligence and DPP
Due diligence creates supply chain data — sourcing information, certifications, audit results, risk assessments — that is increasingly expected to feed into Digital Product Passports. The Battery Regulation (EU 2023/1542) already requires due diligence documentation references in the digital battery passport (Article 52). As ESPR delegated acts develop for textiles and other supply chain-intensive products, DPP fields for provenance and social compliance data are expected.
Related terms
- EUDR — deforestation-specific supply chain due diligence
- Digital Product Passport (DPP) — where due diligence data surfaces at product level
- CSRD — corporate sustainability reporting that includes due diligence disclosures