For Apparel & Footwear Brands: Understanding the Corporate Sustainability Due Diligence Directive (CSDDD)

 Status:  ✅ Approved EU law, has been delayed by Omnibus I Simplification Package

The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) – which entered into EU law in July 2024 – establishes a framework for identifying, preventing, and addressing adverse human rights and environmental impacts in brands’ own operations and key supply-chain partners. 

As part of the EU’s expansive regulatory framework on sustainability, this marks a significant step toward mandatory supply-chain due diligence. For apparel and footwear brands, this includes monitoring issues such as working conditions in garment factories, environmental impacts of material sourcing, and risks linked to subcontracting and logistics.

Recent developments under the EU’s Omnibus I Simplification Package will substantially narrow the scope of brands affected and delay application timelines. As a result, only the largest fashion companies will remain subject to CSDDD obligations, making it essential for brands to understand whether – and how – the directive applies to them.

Let’s dive in!

TL;DR

• What: Directive requiring the largest brands to put human rights and environmental due diligence processes in place across their own operations and direct suppliers.

• Who: Only very large brands remain in scope, those with over 5,000 employees and €1.5bn+ net annual turnover, including non-EU brands with equivalent EU net annual turnover.

• When: Application is expected from 2028, following delays introduced under the Omnibus I Simplification Package.

Omnibus I: How Due Diligence Rules Are Changing for Fashion

Approved in December 2025, the Omnibus I Simplification Package proposes key changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Social Due Diligence Directive (CSDDD), aiming to simplify compliance requirements. 

Read all about Omnibus I in our deep dive for apparel and footwear brands here.

Key Scope Changes to the Corporate Sustainability Due Diligence Directive

• Narrowed scope: Only fashion companies with more than 5,000 employees and over €1.5 billion in net annual turnover fall within the scope of the CSDDD. For non-EU textile brands, the threshold is €1.5 billion in EU-generated net annual turnover.
• Removal of transition plan requirement: Fashion brands are no longer required to adopt a climate transition plan under the CSDDD. (Note: Under CSRD, companies must still disclose a transition plan if they have one.)
• Removal of EU-wide civil liability: EU-level harmonized civil liability rules are deleted. Liability will instead be determined under national laws, and fines may not exceed 3% of global net turnover.
• Revised due diligence process: Due diligence begins with an initial scoping assessment (at the tier-1 partner's level) based on reasonably available information to identify the most likely and severe adverse impacts. More detailed assessment and engagement with business partners follow only where risks are identified.

• Reporting frequency: Companies must report on their due diligence measures every four years, rather than annually.

Key Timeline Changes to the Corporate Sustainability Due Diligence Directive

After Omnibus I, only one group of very large apparel and footwear companies is subject to mandatory due diligence obligations.

• Who: Fashion companies with more than 5,000 employees and over €1.5 billion in global turnover. Non-EU companies that generate more than €1.5 billion in net turnover within the EU, regardless of where they are headquartered.

• When: Implementation of CSDDD into national law has been postponed by one year. This means brands will first be required to comply with due diligence obligations in 2029, covering activities carried out in 2028.

Tip: A parent company can handle CSDDD due diligence for the whole group. Subsidiaries are expected to follow the group’s rules and share relevant information, but they do not have to run separate due diligence processes unless they are large enough to fall within the CSDDD scope themselves.

Important: Because the CSDDD is a directive, it establishes minimum EU-level requirements that Member States must transpose into national law. Following recent delays, Member States have until 2027 to implement the directive. While national implementations must comply with the CSDDD, Member States may introduce stricter rules. 

For many big fashion brands, the delayed deadline for CSDDD reporting will enable them to implement environmental reporting tools and procedures in advance. 

CSDDD Requirements for Apparel & Footwear Brands

The Corporate Sustainability Due Diligence Directive requires brands to embed human rights and environmental due diligence into their practices. The focus is on identifying, preventing, mitigating, and addressing adverse impacts linked to a brand’s own operations and direct (tier-1) business partners.

Under the Omnibus I agreement, due diligence beyond tier-1 suppliers is required only where there is credible evidence of risks further down the supply chain.

Here is a snapshot of the main obligations apparel and footwear brands will meet under the CSDDD:

Integrating Due Diligence Into Policies and Governance

Fashion brands must integrate due diligence into their corporate policies and risk-management systems. For apparel and footwear brands, this typically includes:

• A clear code of conduct covering human rights and environmental standards.
• Contractual expectations for direct suppliers, including compliance and monitoring mechanisms.

For example, brands may include human rights and environmental clauses in tier-1 supplier contracts.

Identifying and Assessing Actual or Potential Adverse Impacts

Fashion companies are required to identify and assess both actual and potential adverse human rights and environmental impacts linked to their own operations and their direct (tier-1) business partners. This starts with a risk-based scoping assessment to identify where impacts are most likely to occur and where they would be most severe.

For apparel and footwear brands, this may involve:

• Mapping tier-1 textile mills and garment factories and identifying processes with high environmental risk, such as dyeing, finishing, and washing.
• Assessing risks related to water use, wastewater discharge, and chemical management, particularly in regions with weak environmental regulation.
• Identifying suppliers associated with high energy consumption, fossil-fuel-based electricity, or pollution-intensive processes.
• Reviewing material sourcing practices linked to deforestation, biodiversity loss, or soil degradation, such as cotton or leather production.

Where significant risks are identified, apparel and footwear brands must carry out a more detailed assessment and engage with the relevant business partners to better understand and address those risks.

Due diligence assessments are conducted on a four-year review cycle, and must be updated earlier where new or heightened risks are identified. Where certain information cannot be obtained despite reasonable efforts, brands are not held liable, provided they can demonstrate those efforts and explain any remaining data gaps.

Preventing, Mitigating, and Ending Adverse Impacts

In addition to its hefty identification and analysis process, the Corporate Sustainability Due Diligence Directive requires brands to take action. The measures expected depend on the severity of the impact and the company’s ability to influence the business partner involved, particularly in supplier relationships.

For apparel and footwear brands, this typically means acting directly on how products are sourced and manufactured. In practice, this may include:

• Adjusting sourcing decisions to reduce exposure to high-risk materials or processes, such as shifting production away from facilities with environmental violations.
• Requiring tier-1 suppliers to meet specific environmental performance criteria, for example, on wastewater treatment, chemical use, or energy sources.
• Embedding environmental and human-rights requirements into supplier contracts and codes of conduct, with clear expectations on compliance and monitoring.

Where actual adverse impacts have occurred, brands must develop a corrective action plan with clear timelines and measurable milestones to track improvement. Ending a business relationship remains a last resort, used only where severe impacts persist and mitigation efforts are unlikely to succeed despite reasonable attempts to influence the partner.

All measures must be risk-based and proportionate, reflecting the company’s level of involvement and leverage over the relevant supplier.

What Are the Next Steps for Fashion Brands?

The EU Commission is currently preparing guidance to help brands comply with the CSDDD. As member states implement their own regulations in accordance with the directive, the EU will release further instructions and establish a helpdesk to assist brands. With the recent "Stop-the-Clock" Directive extending some key compliance deadlines, it’s crucial to stay up to date with these changes as new details emerge.

Carbonfact is an environmental reporting platform, helping apparel and footwear brands build the data foundation and supply-chain visibility needed to support environmental due diligence analysis under the CSDDD, particularly for identifying, prioritizing, and addressing environmental risks linked to direct suppliers.

With Carbonfact, you will have:

Data foundation for supply chain visibility: Automated data integration from PLM, ERP, and traceability systems to map your entire supply chain and create transparency across Tier 1+ suppliers. This supply chain mapping is essential for identifying environmental impacts required under CSDDD.

Environmental risk and hotspot identification: Use environmental footprint indicators to identify high-risk suppliers, materials, and processes, such as energy-intensive mills, dyeing and finishing operations, or pollution-prone regions, to prioritize due diligence actions where impacts are most likely and most severe.

Automated reporting: Many apparel and footwear brands subject to CSDDD are also preparing for or reporting under CSRD. Carbonfact enables brands to reuse environmental data across due diligence and reporting needs, reducing duplication while keeping sustainability efforts aligned across evolving EU regulations.