The Corporate Sustainability Due Diligence Directive (CSDDD), introduced by the European Union and effective from 2024, marks a pivotal shift in the bloc’s approach to environmental and social responsibility. Moving away from voluntary commitments, the EU has established binding legal obligations—a transformation that effectively narrows access to its market for businesses that are unprepared to meet these new standards. The CSDDD requires businesses—including major companies within the EU as well as those outside the bloc with substantial operations there—to take responsibility not only for their direct activities but also across their entire global value chain. According to the directive’s roadmap, between 2027 and 2029, smaller-scale businesses both inside and outside the EU will also be subject to its requirements, provided they reach a specified revenue threshold in the EU market. SMEs in Vietnam under indirect but strongest impact The CSDDD establishes three core obligations that underscore the extent of its legal force. First, businesses must examine their supply chains, identifying, preventing, and addressing adverse impacts on human rights and the environment—including those caused by indirect suppliers. Second, companies are required to develop climate transition plans, ensuring that their operations align with the global objective of limiting temperature rise to 1.5 […]
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