CSRD and CSDDD differences and similarities at a glance
15 May 2024 - The long-expected adoption of the Corporate Sustainability Due Diligence Directive (CSDDD) by the EU parliament on 24 April 2024 is an important complement to existing regulations. Companies in scope should now fully familiarise themselves with CSDDD requirements and understand them in the context of other non-financial due diligence and reporting obligations, including the Corporate Sustainability Reporting Directive (CSRD). So what are the main differences and similarities between the two directives?
In short, while the CSRD emphasises transparency, the CSDDD requires companies in scope to take action to address environmental and social concerns, including within their value chains. This strengthens accountability and responsible business conduct.
The following table provides a more detailed overview of differences and linkages between the two directives:
| CSRD | CSDDD | |
| Aims | 1. Bring sustainability reporting on an equal footing with financial reporting over time 2. Enable the dissemination of reliable, relevant and comparable sustainability information | 1. Ensure that companies contribute to sustainable development through the identification and, where necessary, prioritisation, prevention and mitigation of potential or actual adverse human rights and environmental impacts |
| Focus | 1. The CSRD does not impose any rules of conduct. Instead, it focuses on transparency | 2. The CSDDD requires companies to make an effort to reduce negative impacts |
| Scope | 1. Large companies or groups exceeding at least two of the three criteria: – 250 employees – €50m net turnover – €25m balance sheet total 2. Listed small and medium entities (SMEs) meeting at least two of these criteria: – 10-250 employees – €900k-€50m net turnover – €450k-€25m balance sheet total 3. Non-EU companies or group generating at least €150m net turnover in the EU and with at least one branch or one subsidiary in the EU | 1. Large companies exceeding 1,000 employees and €450m net turnover 2. Franchise companies in the EU with royalties amounting to more than €22.5m and a net worldwide turnover of more than €80mUltimate parent companies of groups that taken together fulfil these conditions 3. Non-EU companies with significant operations in the EU (exceeding €450m net turnover generated in the EU) |
| Obligations | 1. Report on material impacts, risks and opportunities in relation to ESG issues in the company’s own operations as well as along its value chain 2. Report on the company’s due diligence process 3. Report on the company’s climate transition plan 4. Publish the sustainability information in a dedicated section of the management report and have it externally audited | 1. Identify and, where necessary, prioritise, prevent, mitigate, stop or remediate actual or potential adverse human rights and environmental impacts in their own operations and along their global value chain 2. Monitor the effectiveness of measures taken 3. Implement a climate transition plan in line with the 1.5°C climate target 4. Companies that are also in the scope of the CSRD do not have additional reporting obligations |
Looking ahead
Identifying and mitigating human rights and environmental impacts requires robust planning and support. Understanding the differences and similarities between complementary directives, such as the CSRD and CSDDD, can help companies build a more comprehensive view of their reporting obligations; a view that takes evolving regulations into account and avoids potential pitfalls. Keeping track of regulatory developments on sustainability is essential.
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