Corporate Sustainability Due Diligence Directive (CSDDD)

The Corporate Sustainability Due Diligence Directive (CSDDD) creates the most comprehensive due diligence framework for large companies and gives contracts a central role in its implementation. Under Articles 10 and 11, companies must seek contractual assurances from direct business partners.

At the same time, the Directive recognises that many suppliers are SMEs and introduces an important safeguard: when contractual assurances are sought from SMEs, these must remain fair, reasonable and non-discriminatory, taking into account the capacities and resources of smaller companies.The purpose of this safeguard is to prevent situations where large companies shift disproportionate sustainability obligations or risks to smaller suppliers through contracts. Contractual assurances should therefore be proportionate and realistically implementable for the business partner concerned.

What the CSDDD requires companies within its scope to do:

• Obtain contractual commitments from direct business partners to comply with your company’s code of conduct.
• Require partners to comply with prevention or corrective action plans, as necessary.
• Include provisions requiring partners to seek corresponding assurances from their own suppliers.
• Pair contractual assurances with appropriate verification measures, which may include independent third-party verification.
• When contracting with SMEs, ensure terms are fair, reasonable, and non-discriminatory.
• Consider whether SME partners need targeted support to comply.
• Bear the cost of third-party verification when required from SME partners.