EU's CSDDD and Omnibus I Shift Responsibility in Supply Chains
Severity: Low (Score: 21.9)
Sources: www.responsiblecontracting.org, eur-lex.europa.eu, Blogs.Law.Ox.Ac.Uk, papers.ssrn.com
Summary
The European Union's Corporate Sustainability Due Diligence Directive (CSDDD), modified by Directive 2026/470 EU (Omnibus I), mandates that large companies conduct human rights and environmental due diligence across their supply chains. This shift aims to eliminate the traditional risk-shifting model where lead firms transfer compliance burdens to suppliers. Instead, the CSDDD promotes a shared responsibility approach, requiring collaboration between buyers and suppliers to address adverse human rights and environmental impacts. The European Model Contractual Clauses (EMCs) are being developed to align with these requirements, emphasizing effective collaboration and responsible purchasing practices. The EMCs are expected to be finalized in 2026 and will serve as a reference for companies to meet CSDDD standards. The initiative is supported by the Responsible and Sustainable Supply Chains Working Group, which includes legal experts and aims to enhance contract effectiveness in HREDD. The finalization of these clauses is crucial for companies to adapt to the new regulatory landscape. Key Points: • The CSDDD requires large companies to conduct due diligence in supply chains. • A shift from risk-shifting to shared responsibility in contracts is mandated. • European Model Contractual Clauses (EMCs) are being developed to support compliance.