[et_pb_section fb_built=”1″ theme_builder_area=”post_content” _builder_version=”4.27.4″ _module_preset=”default”][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.24.2″ _module_preset=”default” custom_margin=”-177px||||false|false” locked=”off” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row _builder_version=”4.22.1″ _module_preset=”default” border_width_bottom=”1px” border_color_bottom=”#cecece” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.22.1″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” text_font=”Akrobat-SemiBold|||on|||||” text_text_color=”#7d7168″ hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n
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In today’s globalised world, companies are under increasing pressure to make their supply chains<\/a><\/span>\u00a0<\/span> more sustainable and ethical. Two important sets of regulations dedicated to this topic are the EU Sustainable Corporate Governance Directive (CSDDD) and the German Supply Chain Duty of Care Act (LkSG). With the adoption of the CSDDD (Supply Chain Directive) in May, the LkSG will need to be revised over the next two years. This blog article highlights the similarities and differences between these two pieces of legislation with a focus on the new CSDDD and shows how companies are affected by the respective regulations.<\/span><\/a><\/span><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” custom_margin=”60px||||false|false” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” text_font_size=”19px” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n The EU Corporate Sustainability Due Diligence Directive (CSDDD), also known as the EU Supply Chain Directive, aims to hold companies accountable for upholding human rights and environmental standards in their global supply chains. It calls for these challenges to be recognised as transnational issues and tackled jointly and in a coordinated manner. Companies are obliged to fulfil certain due diligence obligations with the aim of avoiding, minimising or ending potential and actual human rights or environmental risks. This includes their own activities as well as those of their subsidiaries and business relationships. <\/span><\/p>\n As this is a directive and not a law, the member states must transpose the requirements into national law within two years. A three-year phase-in period is envisaged for companies: <\/span><\/p>\n [\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n [\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n [\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]The findings are made available as an annual declaration on the company’s website. If the companies are required to report CSRD, the CSDDD report becomes part of the sustainability reporting, otherwise it must be disclosed separately.[\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n The German Supply Chain Due Diligence Act (LkSG) came into force on 1 January 2023 and obliges large companies to fulfil human rights and environmental due diligence obligations along their supply chains. The law initially applied to companies with more than 3,000 employees, and from 2024 also to those with more than 1,000 employees. <\/span><\/span><\/p>\n <\/span><\/p>\n [\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n Both the CSDDD and the LkSG aim to strengthen the responsibility of companies for human rights and the environment in their global supply chains. In addition, both sets of regulations require the implementation of risk management systems to identify and manage risks. The need for transparent reporting on the measures implemented and their impact is also emphasised in both regulations.<\/p>\n Three topics stand out that are included in the CSDDD, whereas the LkSG does not cover these areas: stakeholders, redress\/civil liability and climate targets. We therefore want to take a closer look at these.<\/p>\n Specifically, it is stipulated that stakeholders must be included in the entire due diligence process. This includes the company’s own activities, the activities of subsidiaries and the activities of business partners in the chain of activities. In the context of stakeholder dialogues, companies should conduct effective and continuous consultations at an appropriate level with their employees, the employees of their subsidiaries, trade unions, consumers and other affected groups. This process includes information gathering, the development of preventative and corrective measures, decisions on business relationships and remediation. Here we see parallels with other European laws, such as the CSRD, which also emphasises stakeholder consultations.<\/p>\n The second major difference relates to the handling of violations and the compensation of the resulting damage. In cases where companies’ activities have a negative impact on people, groups or the environment, the Supply Chain Directive (CSDDD) calls for compensation. This is intended to create a situation in which those affected would have found themselves if the harmful effect of the company had not occurred. At the same time, civil liability has also been included in the CSDDD. Victims and those affected can sue companies if they have intentionally or negligently failed to prevent or minimise risks or have not ended or reduced injuries and this has led to damage<\/p>\n The third innovation introduced by the CSDDD is the development and implementation of a climate transition plan by companies. This plan should ensure that the company’s business model and strategy are compatible with limiting global warming to 1.5\u00b0C in accordance with the Paris Agreement and the goal of climate neutrality. The plan should include:<\/p>\n Progress will be monitored by regulators. Companies that already report on their climate transition plans under the CSRD are not required to prepare a new plan, but must update their plans annually.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/terra-institute.eu\/en\/wp-content\/uploads\/2025\/07\/Fig.-1-Table-comparing-the-CSDDD-with-the-LkSG-in-several-thematic-areas.jpg” _builder_version=”4.27.4″ _module_preset=”default” theme_builder_area=”post_content” title_text=”Fig. 1- Table comparing the CSDDD with the LkSG in several thematic areas” hover_enabled=”0″ sticky_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” theme_builder_area=”post_content” hover_enabled=”0″ sticky_enabled=”0″]Fig. 1: Table comparing the CSDDD with the LkSG in several thematic areas[\/et_pb_text][et_pb_image src=”https:\/\/terra-institute.eu\/wp-content\/uploads\/2024\/06\/Lieferkettenrichtlinie-vs.-Lieferkettengesetz-e1718032975375.jpg” alt=”Tabelle Lieferkettenrichtlinie vs. Lieferkettengesetz” title_text=”Lieferkettenrichtlinie vs. Lieferkettengesetz” disabled_on=”on|on|on” _builder_version=”4.24.2″ _module_preset=”default” disabled=”on” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][et_pb_text disabled_on=”on|on|on” _builder_version=”4.24.2″ _module_preset=”default” text_font_size=”19px” disabled=”on” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n Abb. 1: Tabelle zum Vergleich der CSDDD mit dem <\/span>LkSG<\/span> in mehreren inhaltlichen Themenpunkten<\/span><\/em><\/p>\n [\/et_pb_text][et_pb_text module_id=”massnahmen-unternehmen” _builder_version=”4.27.4″ _module_preset=”default” text_font_size=”19px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n The introduction and implementation of the CSDDD and the LkSG mark significant steps towards more responsible and sustainable corporate governance. While both pieces of legislation pursue similar objectives, they differ in their scope and specific requirements. Companies should take a close look at both sets of regulations to ensure that they fulfil their legal obligations while making a positive contribution to global sustainability.<\/p>\n The implementation of these due diligence obligations requires strategic adaptation of corporate processes, close cooperation with stakeholders and continuous monitoring and improvement of measures. This is the only way for companies to meet the growing expectations of legislators, customers and society while remaining successful in the long term.<\/p>\n How can you as a company prepare for the CSDDD? Find out more in this blog post. \u2018Preparing for the new CSDDD<\/a>\u2019.<\/p>\nOVERVIEW OF THE EU SUPPLY CHAIN DIRECTIVE <\/h2>\n
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CORE REQUIREMENTS OF THE EU SUPPLY CHAIN DIRECTIVE <\/h2>\n
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OVERVIEW OF THE SUPPLY CHAIN LAW<\/h2>\n
CORE REQUIREMENTS OF THE SUPPLY CHAIN ACT<\/h2>\n
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COMPARISON OF THE TWO LEGISLATIONS<\/h2>\n
SIMILARITIES<\/span><\/h3>\n
DIFFERENCES<\/h3>\n
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SUMMARY AND OUTLOOK<\/h2>\n