The incoming Corporate Sustainability Due Diligence Directive (CSDDD) is “a breakthrough in legislation” that will shift the commitment dial of companies from voluntary to legally binding, noted a legal expert speaking on a panel at Fi Europe, where data analysis emerged as a key lever to initiate the necessary supply chain transformation.
Opening the ‘Successful sustainability strategies: CSDDD and beyond’ panel, moderator Rob Kooijmans – founder of AI-assisted documentation validation platform Valid8Food – read a quote from American business theorist, W. Edwards Deming: “It is not necessary to change. Survival is not mandatory”. Survival from an operational perspective will require businesses to reduce sustainability-related risk, he noted, with the European Union’s incoming CSDDD designed to help drive that shift.
Kooijmans was joined by Heleen Blesgraaf, corporate engagement and partnerships manager at international sustainability NGO Solidaridad, who offered examples of best practice in food commodity supply chains today, and Nicolas Carbonnelle, partner at international law firm Bird & Bird, who has been closely following developments around sustainability regulations in the EU.
Legal expert Carbonnelle described the incoming CSDDD as “a breakthrough in legislation” that would shift the dial from previous voluntary efforts towards making sustainability commitments “a binding legal requirement for the future”. Crucially, CSDDD would create “a level playing field not only for Europe, but globally,” he said, “because the standards enshrined within this text will effectively apply to businesses worldwide, not just European operators.”
While the CSDDD text has been “watered down” from its initial ambition – meaning only larger corporations will now be captured within scope – in reality, such operators will “need to work on their whole supply chain; they will need to gather data and act, in order to enact the principles enshrined in the Directive,” Carbonnelle advised.
The CSDDD must be enshrined in national law by all EU member states by July 2026, with the text becoming applicable one year later for the largest organisations within scope (companies with €1.5bn+ turnover worldwide, and over 5,000 employees), followed by smaller companies in the years thereafter, until 2029 when firms with more than 1,000 employees and over €450m turnover will see their obligations kick in. Overall, approximately 6,000 companies within Europe, and around 900 outside of the bloc, will fall within scope of the new Directive, said Carbonnelle.
“For suppliers and buyers, compliance with this new Directive will hinge on data – and that aspect also has the potential to throw up plenty of challenges,” asserted Kooijmans of Valid8Food, whose AI-assisted platform aims to simplify the flow of documents and data between buyers and suppliers in the food industry. “Throughout supply chains, the data [for sustainability reporting] is certainly not yet standardised, and there’s a lack of clarity,” he observed, highlighting the potential for “confusion in the wider supply chain to propagate that data”. If a supplier sells to two large companies, he exemplified, they might get two totally different sets of questions to answer, creating an unnecessary duplication of work.
Bird & Bird’s Carbonnelle agreed there were elements of the Directive that still require clarification, but assured this was “part of a process” and “guidance is coming”. The Directive defines the main obligations of operators – conducting a risk-based assessment of their operations, identifying the risks and addressing those risks, “but what are the metrics, the parameters, the KPIs? ... The Commission is expected to issue guidelines on that ,” he advised. “Consultations are ongoing, so stakeholders are being invited to – and should – participate in that exercise.”
Guidelines to assist companies in fulfilling such requirements are expected to be released from 2026 onwards, advised Carbonnelle. “It’s a critical phase we’re in now,” in terms of ensuring “the text will be fit for purpose and for practical implementation, to effectively yield results”.
The main advantage this Directive brings from a legal point of view is that it creates a level playing field, re-emphasised Carbonnelle: “Most operators captured within scope of this new Directive are already active on the sustainability front,” he said, yet “most existing initiatives are voluntary”, and “limited in scope”, with no harmonised approach”. Under CSDDD, “all companies [within scope] will need to abide by the same framework”.
“And let’s not forget, there’s a ‘stick’ attached to this, with the Directive setting a framework for really heavy fines for not complying,” he stressed. “[Companies within scope will have] an ‘obligation of means’ to assess the risks and define their plans to tackle them, and also how to remedy those negative impacts they have identified.”
Beyond compliance, Kooijmans believed additional benefits would emerge for businesses in having access to more data. “Having data alone is of no value, because data must be used to take decisions, so if companies really start looking at the key risks, managing those, and making a change from within their supply chain – that’s where CSDDD and the principles behind it can really help make a difference in the world,” he asserted. “It’s about analysing your own data, understanding your supply chains, and taking concerted action to improve situations – to ensure the environment is safeguarded longer term, and to actively improve human rights in the wider supply chain.”
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