What Does the CS3D Mean for Companies?

The Corporate Sustainability Due Diligence Directive (CS3D) is a European directive that requires companies to take responsibility for the social and environmental effects throughout their entire value chain.

Zeno, what exactly is the CS3D?

Zeno Callens:
The Corporate Sustainability Due Diligence Directive (CS3D) is a European directive that obliges companies to take responsibility for the social and environmental effects within their entire value chain. This means companies must proactively identify, prevent, and address risks and negative impacts on people and the environment.

The CS3D focuses on human rights, labor conditions, and environmental protection, aiming to promote fair and sustainable business practices both within and outside Europe.

Which companies fall under the CS3D?

Zeno Callens:
The directive applies to:

1. Large EU-based limited liability companies and partnerships:

   • More than 1,000 employees

   • More than EUR 450 million in net worldwide turnover

2. Large non-EU companies:

   • More than EUR 450 million in net turnover within the EU

The directive includes provisions to facilitate compliance and reduce burdens for companies within the scope, as well as for those in the supply chain.

1. SMEs (Small and Medium Enterprises):

   • Micro-enterprises and SMEs are not directly subject to the rules.

   • However, the directive provides support and protection measures for SMEs, which may be indirectly affected as business partners within value chains.

When does the CS3D come into effect?

Zeno Callens:
EU member states must transpose the directive into national law by July 26, 2026 and submit the relevant texts to the European Commission.
A phased implementation follows, with the first group of companies required to comply one year later, and full application of the directive by July 26, 2029.
Companies should start preparing now to ensure timely compliance and effectively manage sustainability risks.

What are the key obligations under the CS3D?

Zeno Callens:
The directive imposes a due diligence duty on companies, requiring them to:

• Identify and address potential and actual negative effects on human rights and the environment.

• Monitor their own operations, subsidiaries, and—if linked to their value chains—business partners.

• Develop and implement a climate transition plan, aligned with:

  • The Paris Agreement’s climate neutrality goal for 2050

  • The interim targets of the European Climate Law

Why is the CS3D important for companies?

Zeno Callens:
A harmonized legal framework across the EU creates legal certainty and a level playing field for companies. This builds trust among customers and enhances employee engagement.

Additionally, companies gain better insights into their negative impacts, reducing liability risks and improving risk management. This makes businesses more resilient and competitive.

A strong sustainability policy also boosts attractiveness for:

• Top talent

• Sustainability-focused investors

• Government contracts and funding opportunities

Moreover, the directive drives innovation and improves access to financing.

How can companies prepare for the CS3D?
Zeno Callens:

1. Conduct a gap analysis to assess how existing processes align with CS3D requirements.

2. Establish a clear due diligence framework and build internal capabilities to systematically integrate sustainability into business strategy.

At Sustinera, we guide companies step by step through this process, helping them:

• Identify risks

• Develop policies

• Implement monitoring tools

Where can companies find more information about the CS3D?

Zeno Callens:
More information on the CS3D is available on the European Commission’s website, where the latest updates and guidelines are published.
At Sustinera, we are ready to provide practical and strategic support to help companies comply with all requirements and achieve their sustainability goals effectively.