Shift from voluntary to mandatory—There’s a steady global shift happening, away from purely voluntary corporate social responsibility initiatives toward legally binding due diligence obligations.

Increased alignment with international standards—Many laws are rooted in the UN Guiding Principles on Business and Human Rights and the Organization for Economic Co-operation and Development Guidelines, promoting a consistent global approach to identifying, preventing, mitigating, and accounting for adverse human rights and environmental impacts.

Standardization of mandatory due diligence laws—Transparency and reporting requirements are standard within due diligence legislation, but enforcement often includes a spectrum of accountability mechanisms, from fines to exclusions and/or civil liabilities. Many of these laws can apply to non-domestic companies doing business within the enacting country’s jurisdiction.

Slowness of U.S. Companies—A 2023 KPMG ESG due diligence study found that U.S. companies lag behind investors and businesses in the UK, Middle East, and Asia in integrating sustainability and due diligence into their business plans.

Beginning in 2022 the European Union has adopted two major pieces of due diligence legislation, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Since then there has been a concerted push from European Union leaders to streamline and simplify European Union regulation. This has resulted in the Omnibus Simplification Package. As part of this effort the implementation of various aspects of the regulations, including the CSRD and CSDDD, have been put on hold. Due to the complex nature of the EU legislative process there is no final draft of the Omnibus Simplification Package available. Currently the European Commission and European Council have adopted separate versions of the legislation and the European Parliament is in the process of creating their version of the package. Once this is complete the three branches will harmonize the versions and pass a final package. At the end of this process both the CSRD and CSDDD will need to be implemented according to the final form approved. Below is guidance based on the original CSRD and CSDDD legislation as well as the changes included in the Omnibus Simplification Package that may affect these regulations.

CSDDD is a July 2024 EU regulation requiring large companies to identify, prevent, and mitigate adverse human rights and environmental impacts across their operations and global value chains. Focusing on the human rights and environmental impacts of company operations, CSDDD will require certain companies doing business in the EU to undertake risk-based due diligence. The implementation of this directive is currently on hold while the European Union considers the Omnibus Simplification Package. The original directive includes:

• Integrating due diligence into policies and risk management systems
• Identifying, assessing, and (where necessary) prioritizing potential and actual adverse impacts
• Preventing and mitigating potential adverse impacts
• Bringing actual adverse impacts to an end, or minimizing their extent
• Remediating actual adverse impacts
• Carrying out meaningful engagement with stakeholders
• Establishing and maintaining a notification mechanism and complaints procedure
• Monitoring the effectiveness of due diligence policy and measures
• Communicating publicly on due diligence

Originally the application of the CSDDD was to be phased-in gradually, based on company size and turnover, starting in 2027 as follows: For companies with 1,000+ employees and a net worldwide turnover of over €450 million (for EU companies) or at least €450 million in the EU (for non-EU companies), application was set to begin in 2029. However this phased-in timeline and requirements may be altered due to the proposed Omnibus Simplification Package (see below).

The CSRD is an EU regulation that requires companies to disclose detailed information on their environmental, social, and governance (ESG) impacts, risks, and opportunities. The “large EU subsidiaries” criteria says that if an international company has a EU-based subsidiary that meets specific thresholds (more than 250 employees, a net revenue of over €40 million, or total assets exceeding €20 million), that EU subsidiary may be impacted by this regulation. Aspects of this directive are currently on hold while the European Union considers the Omnibus Simplification Package. Large companies with more than 250 employees are now required to begin reporting in 2028, and small and medium enterprises now have until 2029 to begin reporting. Additionally, the requirements and timelines in the CSRD may be altered by the Omnibus Simplification Package (see below).

Introduced in February 2025, the Omnibus Simplification Package (legislative proposal) by the European Commission aims to reduce regulatory burdens on businesses by streamlining sustainability reporting and due diligence requirements, particularly within the CSRD and the CSDDD. It aims to enhance competitiveness while maintaining the EU’s commitment to sustainability goals. This legislation is still being drafted and may change before final approval. If accepted by the European Parliament, these major changes directly affect human rights due diligence requirements include:

• CSDDD
  • Implementation timelines: All timelines are delayed for one year. For companies with 1,000+ employees and a net worldwide turnover of over €450 million (for EU companies) or at least €450 million in the EU (for non-EU companies), application will now begin in 2030.
  • Civil liability changes: Removes the specific EU-wide civil liability requirement and eliminates the requirement for member states to allow civil society organizations to represent victims in court.
  • Value chain due diligence limits: Due diligence reduced to direct (tier 1) suppliers and business partners, making companies responsible for assessing and addressing adverse impacts within their own operations, subsidiaries, and direct relationships, rather than further down the supply chain.
  • Scope: The European Council version of the CSDDD includes a scope applying the CSDDD only to companies with 5000 employees and €1.5 billion in annual turnover. This is not included in the European Commission version of the package. 

• CSRD
  • Affected companies: Increases the minimum company size for reporting; only companies with more than 1,000 employees and a net revenue of over €50 million are required to align with the CSRD.

EU Forced Labour Import Ban

On April 23, 2024, EU lawmakers voted in favor of the Forced Labour Regulation, which covers both the import of goods and the trade of goods within the EU. Just like with Withhold Release Orders, the goal of this regulation is to prevent goods produced with forced labor from entering the European market. The law is designed to go hand in hand with CSSSD, but goes into force in 2026 whether or not CSDDD is ready to move forward.

German Supply Chain Due Diligence Act (LkSG)

In effect since January 2023, this law requires larger German companies (and foreign companies with significant branches in Germany) to establish and implement due diligence obligations to prevent and mitigate human rights and environmental risks in their own operations and supply chains. It will remain in force until the CSDDD is fully transposed into German law.

French Duty of Vigilance Law (Loi de Vigilance)

Adopted in 2017, this was the world’s first comprehensive, mandatory corporate due diligence law. It heavily influenced the development of the CSDDD, which has a broader scope, covers additional topics like climate, and applies to a wider range of companies, including smaller firms in France.

Norwegian Transparency Act

Since 2022 this law requires larger enterprises to conduct due diligence according to the OECD Guidelines and report on their efforts. It also grants individuals the right to request information about how companies address human rights risks.

Australian Modern Slavery Act

Since 2018, this law has required large entities (with annual revenue of at least AU$100 million) to report annually on modern slavery risks in their operations and supply chains and the steps taken to address those risks. While the act encourages due diligence, it does not mandate that companies implement specific measures.

Japanese Guidelines on Respect for Human Rights in Responsible Supply Chains

Issued as nonbinding guidance in 2021, these government-backed guidelines encourage companies to voluntarily conduct human rights due diligence to prevent violations in their supply chains. They promote responsible business conduct and align with international expectations, despite the lack of enforcement mechanisms.

Thai Draft Mandatory Human Rights and Environmental Due Diligence Law I

nitiated in March 2025, this legislation will require businesses operating in Thailand to identify, prevent, and address human rights and environmental risks within their operations and supply chains, building on the foundation of Thailand’s National Action Plan on Business and Human Rights.

Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act Passed in May 2023, this law mandates that certain businesses and government institutions report annually on measures to prevent and address forced and child labor in their operations and supply chains. The Canadian government has indicated plans to introduce a broader mandatory due diligence law akin to the EU’s CSDDD.

U.S. National Action Plan on Responsible Business Conduct

Released in March 2024, this plan from the Biden administration sets forth the government’s expectation that all businesses, regardless of size or structure, voluntarily implement human rights due diligence to identify and address human rights risks in their operations and supply chains. Although not legally enforceable, it mandates action by federal agencies. This action includes the development of a human trafficking risk mapping tool from the Department of State and enhanced guidance on suspension and debarment for imports linked to forced labor from U.S. Customs and Border Protection. The Trump administration has not put forward guidance on the action plan or issued any executive orders affecting its implementation.

California’s Transparency in Supply Chains Act 

Enacted in 2010, this law requires certain large retailers and manufacturers doing business in California to publicly disclose their efforts to eradicate slavery and human trafficking from their direct supply chains. It is a transparency-focused law and does not impose mandatory due diligence.