Facebook X-twitter Linkedin Instagram Youtube
Global Advisory firm, international consulting firm in India, business operations in India, india business strategy
Read Time: 7 min

Legal Chronicle

March 2026

Corporate Sustainability Due Diligence Laws

India | Japan | Italy | Spain | France | German | UAE

Index

Corporate Sustainability Due Diligence Laws:
A Comparative Study (EU vs Rest of the World)

1

Introduction

2

Background: The Rise of Mandatory Due Diligence

3

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD)
3.1. Scope and Key Features
3.2. Implementation, Thresholds and Enforcement

4

National Due Diligence Regimes Outside the EU
4.1. France’s Duty of Vigilance Law
4.2. Germany’s Supply Chain Act
4.3. United Kingdom’s Modern Slavery Act
4.4. Other Global Legal Developments (US, Norway, Switzerland, etc.)
5Comparative Analysis
5.1. Scope and Regulatory Reach
5.2. Due Diligence Requirements
5.3. Enforcement and Liability
5.4. Extraterritorial Impact

6

Challenges and Critiques

7

References

8

Conclusion 

9

About Us

10

Our Team

Dear Reader,

The Legal Department at UJA is delighted to impart certain legal knowledge as construed under Legal Chronicle to keep the readers aware about the recent updates and developments that revolve around various aspects of law. Our ultimate goal is to enable our readers to develop a sense of familiarity with the complexities of Indian as well as International Law. In this edition, Legal Chronicle examines the evolving legal landscape of corporate sustainability due diligence, with particular focus on the European Union’s Corporate Sustainability Due Diligence Directive and comparable regulatory approaches adopted across different jurisdictions

We hope that this edition creates a sense of enthusiasm for our readers and successfully delivers the plethora of legal knowledge as intended. In case you have any feedback or need us to include any information to make this issue more informative, please feel free to write to us at legal@uja.in.

Introduction

In the aftermath of globalization’s expansion, corporate sustainability has emerged as a defining element of modern economic governance. As global value chains became more complex and geographically dispersed, voluntary sustainability commitments proved insufficient to ensure human rights or environmental protection. Accordingly, legislatures worldwide have begun to adopt laws that mandate corporate due diligence — requiring companies to assess, prevent and remedy adverse impacts arising from their operations and supply chains. This comparative study examines the European Union’s (EU) evolving due diligence legal regime alongside key approaches in other jurisdictions, highlighting their features, differences and implications for global business operations. 

Background: The Rise of Mandatory Due Diligence

For decades, corporate sustainability relied primarily on voluntary frameworks such as the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises. While these voluntarist standards provided ethical benchmarks, they lacked enforceable legal force. In response, legislators began to impose mandatory human rights and environmental due diligence rules requiring companies to identify and address risks across their value chains. This shift marks a notable transformation in both the regulatory landscape and corporate compliance expectations.

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD)

Scope and Key Features

  • The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) represents one of the most ambitious attempts to standardize corporate sustainability obligations across multiple jurisdictions within a single regulatory framework. Formally adopted in 2024, the directive imposes legal duties on companies to examine both actual and potential environmental and human rights impacts arising from their operations, subsidiaries and broader supply chains.
  • Originally designed with relatively broad coverage, the CSDDD required companies to adopt climate transition plans aligned with the Paris Agreement and integrate sustainability into business strategy. However, recent legislative amendments have significantly scaled back the original scope. New thresholds, effective from delayed phased implementation, mean only very large firms — those with more than 5,000 employees and €1.5 billion in turnover — will be mandated to comply from mid‑2029 onwards. Smaller companies are effectively exempt at this stage.

Implementation, Thresholds and Enforcement

  • Implementation of the CSDDD is gradual. Member States must transpose the directive into national laws within a defined period after its enactment and compliance is phased in over several years. Notably, the directive applies not only to EU companies but also to non-EU companies with significant turnover in the EU. Enforcement mechanisms include fines based on a percentage of global turnover and civil liability provisions that allow affected parties to seek remedies.
  • Recently, political pressure from industry and foreign governments — including the United States and Qatar — has led to further weakening of sustainability obligations and reporting requirements, reflecting concerns about competitiveness and regulatory burden. 

National Due Diligence Regimes Outside the EU

France’s Duty of Vigilance Law

  • France was a pioneer in mandatory corporate due diligence with its Duty of Vigilance Law, enacted in 2017. Under this statute, large French companies — typically those with at least 5,000 employees domestically (or 10,000 worldwide) — must publish and implement a detailed vigilance plan. This plan must assess risks to human rights and the environment within the entire supply chain and prescribe mitigation measures. Non-compliance can lead to civil liability, allowing victims to pursue legal claims.

Germany’s Supply Chain Act

  • Germany’s Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz or LkSG) came into force in 2023 and applies to companies headquartered in Germany with at least 1,000 employees, lowering to 500 in later phases. Companies must conduct risk assessments, implement risk‑mitigation practices and publish annual reports. Enforcement is primarily administrative and penalties include fines and exclusion from public contracts.

United Kingdom’s Modern Slavery Act

  • The United Kingdom’s Modern Slavery Act 2015 relies on a disclosure regime requiring companies above a certain revenue threshold to publish annual statements describing efforts to ensure slavery and human trafficking are not taking place in their operations or supply chains. Unlike the French or German laws, this approach emphasizes transparency rather than mandated risk mitigation actions and enforcement relies on reputational pressure rather than significant sanctions.

Other Global Legal Developments

  • Beyond Europe, jurisdictions such as Norway, Switzerland, Canada and the United States have taken various steps toward similar due diligence regulation. The U.S., for instance, has adopted targeted laws like the Uyghur Forced Labor Prevention Act, which prohibits imports of goods suspected to involve forced labour, placing burdens of proof on importers — albeit without a general corporate sustainability due diligence regime. 

Comparative Analysis

Scope and Regulatory Reach

  • The EU’s CSDDD aspires to unify due diligence across member states, creating a harmonized legal baseline and covering larger companies and their foreign counterparts with significant EU market presence. In contrast, national regimes such as France’s and Germany’s have differing thresholds and scopes and the UK’s model limits itself to disclosure without concrete mitigation duties.

Due Diligence Requirements

  • While the EU and French laws require comprehensive risk assessment, mitigation and monitoring across the full value chain, the UK model focuses primarily on transparency. Germany requires risk assessment and mitigation but places less emphasis on civil liability. The variance reflects differing regulatory philosophies — from preventive action to reporting obligations.

Enforcement and Liability

  • The EU’s approach includes civil liability and financial penalties, giving legal standing to affected stakeholders. French law similarly allows for civil claims, while the German regime relies more on administrative enforcement. The UK law contains few enforcement mechanisms, underscoring its softer approach.

Extraterritorial Impact

  • A distinctive feature of the EU’s regime is its extraterritorial reach. Non-EU companies with substantial turnover in the EU are subject to the CSDDD, incentivizing global compliance and potentially driving convergence in international standards. National laws like France’s and Germany’s apply primarily to companies headquartered therein, though global operations are included in risk analyses.

Challenges and Critiques

Despite significant progress, mandatory due diligence laws face several challenges. Critics argue that compliance costs and administrative burdens are high, especially for smaller suppliers in complex supply chains. Additionally, recent political compromises have raised thresholds and delayed implementation to reduce burdens on industry, potentially weakening the original regulatory intent and undermining global human rights and environmental goals.

Differences in enforcement mechanisms and the absence of uniform civil liability frameworks in some jurisdictions also challenge harmonization efforts. Furthermore, debates continue regarding the effectiveness of due diligence provisions in actually remediating harms versus generating paperwork without substantive change.

Conclusion

Corporate sustainability due diligence laws represent a fundamental shift in the regulatory landscape governing multinational business conduct. The European Union’s CSDDD and various national regimes underscore a global transition from voluntary corporate social responsibility to mandatory accountability for human rights and environmental impacts. Although significant disparities exist in scope, enforcement and legal design, these frameworks share a common objective: to ensure that companies actively manage and mitigate the adverse impacts of their operations and supply chains. As these legal regimes evolve, harmonization and practical enforcement will remain central challenges for policymakers and the global corporate community alike. 

Disclaimer

This document is intended to provide general information and is not intended to be substituted for any legal or professional advice. This document is meant exclusively for informational purposes and not for advertising or solicitation. UJA has made significant efforts to ensure that the information contained in this document is accurate and reliable. However, the information herein is provided “as is” without warranty of any kind. UJA hereby disclaims all responsibility and liability, whether stated or implied, for the accuracy, validity, adequacy, reliability or completeness of any information provided under this document. In no event shall UJA be held liable for any losses or damages whatsoever incurred as a result of using this document.

About UJA

The UJA’s team specializes in offering a wide range of legal solutions, ensuring comprehensive support for both businesses and individuals.  

Our Comprehensive Services Include:

  • Legal Advisory
  • Contract Negotiation & Management
  • Financial & Legal Due Diligence
  • Immigration-related Services
  • Drafting & reviewing of legal documents, policies & Notices
  • Labour Law
  • Dispute Resolution & Arbitration
  • Business & Operational Restructuring for M&A
  • Trademark Filing & IP-related advisory
  • Legal Metrology & Related Services

UJA supports businesses in navigating complex regulations, global markets, and GI laws. Operating across France, Germany, Japan, Spain, and more, we specialize in market entry, expansion, and offering tailored solutions for growth. With over 29 years of experience and a team of 170+ experts, we have helped more than 1000 clients from SMEs to MNCs achieve their goals. Headquartered in Pune, we have offices across India – Bengaluru, Gurugram, Mumbai and International Offices in Japan, Italy and France with the representation in Germany, Spain & the UAE.

References

European Parliament. (2022). Corporate sustainability due diligence: Overview of EU and national laws. European Parliamentary Research Service.

Financial Times. (2025, December 16). Green groups accuse EU of betrayal over reduced oversight of firms.

Modern Slavery Act 2015. (UK).

Skadden, A. (2024). Corporate sustainability due diligence directive: Key insights for companies. Skadden Insights.

The Guardian. (2025, December 16). EU vote reduces oversight of firms, angering environmental groups.

UN Environment Programme Finance Initiative. (2025). Corporate sustainability and human rights: Global perspectives.

NYU Compliance & Enforcement. (2024, March 20). Supply chain due diligence obligations in Germany, France and the EU: An overview.

NYU Compliance & Enforcement. (2024, March 20). Supply chain due diligence obligations in Germany, France and the EU: An overview.

Trade Beyond. (n.d.). The list of global supply chain due diligence laws keeps growing.

Wikipedia. (n.d.). Corporate Sustainability Due Diligence Directive.

Our Team

Meet Our Experts
Our Team
Download PDF

Download PDF