The Corporate Sustainability Due Diligence Directive (CS3D) is a major regulatory initiative from the European Union that is reshaping how companies approach environmental and human rights responsibilities across global operations. Also referred to as the CS3D EU Directive or simply CSDDD, this legislation introduces mandatory due diligence obligations for large companies – both EU-based and non-EU firms with substantial operations in the EU.
Whether you’re asking, “What is CS3D?” or already mapping your supply chain for compliance, this guide breaks down the directive’s key CS3D timelines, requirements, and implications, particularly for businesses operating in or trading with France.
What is CS3D?
The Corporate Sustainability Due Diligence Directive (CS3D) is a legislative initiative by the European Union that introduces mandatory environmental and human rights due diligence obligations for large companies. It aims to ensure that businesses operating in the EU respect human rights and environmental standards throughout their entire global value chain.
CS3D applies to both EU companies and non-EU companies that meet certain thresholds. It requires them to identify, prevent, mitigate, and account for actual or potential adverse impacts on people and the planet.
The key objectives of CS3D are to:
- Promote sustainable and responsible corporate behavior
- Embed environmental and human rights risk management into business operations
- Create a level playing field for companies operating in the EU market
The directive is closely aligned with global standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, but it transforms those into binding obligations.
CS3D is part of a wider EU agenda to promote sustainability and corporate accountability, alongside initiatives like the CSRD (Corporate Sustainability Reporting Directive) and the EU Taxonomy. Together, these laws are reshaping corporate governance and ESG compliance across the region.
Who Must Comply and What is the CS3D Timeline?
CS3D applies in three waves based on company size:
- July 2027 (Wave 1): EU companies with over 5,000 employees and €1.5 billion in turnover, including equivalent non-EU firms operating in the EU.
- July 2028 (Wave 2): EU companies with over 3,000 employees and €900 m turnover.
- July 2029 (Wave 3): EU and non-EU companies with over 1,000 employees and €450 m turnover in the EU.
This phased approach gives companies time to build internal processes and systems for compliance.
Note: The CS3D officially entered into force on 25 July 2024, with an implementation deadline set for 26 July 2026. As of May 2025, France, like many other EU Member States, has not yet transposed the directive into national law, and no official updates have been announced since then.
What Are the Due Diligence Obligations Under CS3D?
The CS3D outlines a set of due diligence responsibilities for in-scope companies. While many of these align closely with France’s existing Loi de Vigilance, the CS3D introduces key clarifications and enhancements that even companies already subject to the French law will need to account for:
- Due Diligence Policy: Companies must establish a risk-based due diligence strategy in collaboration with stakeholders. This must include:
- A detailed explanation of their due diligence approach
- A code of conduct
- An overview of internal procedures for embedding and carrying out due diligence across operations
- Risk Mapping and Prioritisation: Businesses are required to identify, assess, and rank risks to both human rights and the environment. The CS3D includes guidance on how to prioritise based on the severity and likelihood of harm. It also refers to specific international human rights and environmental standards (provided in annexes) that companies must use as benchmarks.
- Preventive and Mitigating Actions: Companies must take appropriate steps to prevent or minimize potential negative impacts. These may include:
- Requiring contractual commitments from partners
- Implementing codes of conduct
- Creating remediation plans
- Providing support, financial or operational, to SMEs
- Making investments aimed at improvement
- As a last resort, ending business relationships where necessary
- Ongoing Risk Assessments: Businesses are expected to carry out regular evaluations of their subsidiaries, subcontractors, and partners to ensure that due diligence risks are properly managed across the value chain.
- Effectiveness Reviews: Companies must periodically assess the adequacy and impact of their due diligence processes, reviewing both their own actions and those of relevant stakeholders.
- Grievance and Reporting Mechanisms: A formal procedure for handling complaints and reporting concerns must be in place, enabling affected parties and whistleblowers to raise issues.
- Climate Transition Planning: In addition, companies must adopt a climate transition plan aimed at aligning their business strategy with the 1.5°C goal of the Paris Agreement. While the directive doesn’t enforce specific climate outcomes, it obliges companies to make reasonable efforts to support climate targets.
Post-Omnibus Outlook: How Will France Implement the CS3D Directive?
Raising the Thresholds
France has played a pivotal role in shaping the final form of the CS3D, particularly by lobbying for higher applicability thresholds.
As a result, the Omnibus Directive reflects these concerns: Wave 1 of CS3D will now apply only to companies with at least 5,000 employees and €1.5 billion in net global turnover.
This mirrors the scope of France’s domestic legislation, which has applied to large corporations since 2017.
This increase in thresholds effectively limits the immediate scope of CS3D in France and gives smaller French companies additional time to prepare. It also ensures that the law targets companies with the most significant international supply chains and influence over global sustainability risks.
For multinationals, this alignment reduces overlap between French and EU-level due diligence obligations.
A Tier 1-Only and Risk-Based Due Diligence Approach
One of the most significant changes France supported through the Omnibus was the shift toward a risk-based approach focused primarily on Tier 1 suppliers.
Under this model, companies are not required to conduct exhaustive mapping of their entire supply chain unless credible evidence suggests potential or actual adverse human rights or environmental impacts further down the value chain.
This marks a significant refinement to the original CS3D proposal, which placed broad obligations on companies to examine their entire supply chain, regardless of risk level.
Companies operating in France are now expected to adopt scoping methodologies to prioritize due diligence actions, formalize internal processes, and rely on credible indicators or stakeholder feedback to guide deeper investigations beyond Tier 1.
Postponement of the Climate Transition Plan Requirement
The CS3D directive maintains the requirement for in-scope companies to adopt a climate transition plan aligned with the 1.5°C target of the Paris Agreement.
However, France and other Member States successfully negotiated a one-year delay for this obligation during the Omnibus negotiations, allowing companies additional time to align their strategies and reporting with EU climate targets.
Under the revised timeline, companies are still required to integrate climate transition planning into their corporate strategy, but the enforcement of this element has been postponed allowing for a phased approach.
In practice, national regulators, like France’s Autorité des marchés financiers (AMF), are now expected to play a proactive role in guiding companies through implementation. This includes issuing sector-specific guidance, clarifying expectations for content and metrics, and providing transitional relief for companies in hard-to-abate sectors.
Conclusion & Next Steps
The CS3D marks a pivotal change in EU regulation, extending responsibility for sustainability outcomes well beyond immediate operations. For international businesses with activities in France or the broader EU, ensuring compliance demands early action:
- Map your supply chain (starting with Tier 1),
- Conduct robust risk and impact assessments,
- Formalize due diligence policies and engage stakeholders,
- Prepare your first public statement as required by CS3D.
Though Wave 1 deadlines have shifted to July 2028 in France, remaining informed and proactive is key.
To know more about the requirements under CSRD, you can refer to this article.
Our team helps companies align with new regulations, whether through policy design, risk assessments, or compliance audits.