On June 12, 2026, the European Commission (“Commission”) launched its public consultation on guidelines (“Guidelines”) that will significantly shape the implementation of the EU’s Corporate Sustainability Due Diligence Directive (“CSDDD;” more details about the CSDDD available here). The consultation, presented in the form of a detailed questionnaire, is open until July 24, 2026. The Commission has indicated it plans to adopt a set of Guidelines in the first quarter of 2027.
The Guidelines are ultimately required to cover due diligence practices (including responsible disengagement and appropriate remediation measures), sector-specific guidance, risk factors, model contractual clauses, stakeholder engagement, data and information sources, digital tools that could support compliance, fitness criteria and assessment methodologies for third-party verifiers and industry initiatives, penalties, and information-sharing among companies. For companies developing their CSDDD compliance programs ahead of the 2029 application date, these Guidelines will likely serve as a significant reference point. Given the complexity of the CSDDD’s due diligence framework, the Guidelines, although non-binding, will in practice be key to operationalizing compliance and ultimately shaping the expectations of supervisory authorities, courts, and stakeholders. Companies should therefore consider participating in the consultation process to help shape the practical contours of this regime.
In this post, we highlight the key issues likely to drive engagement and debate as the Guidelines take shape.
Key Issues to Watch
1. Operationalizing the Two-Step Impact Assessment & Prioritization Process
The issue: Article 8 of the CSDDD introduces a two-step approach to identifying and assessing actual and potential adverse human rights and environmental impacts: a scoping exercise based on “reasonably available information,” followed by an in-depth assessment in areas where adverse impacts have been identified as most severe and most likely. Once impacts are identified, the CSDDD allows companies to prioritize them based on their severity and likelihood where it is not feasible to address all impacts simultaneously and to their full extent (Article 9).
Open for consultation: The consultation asks detailed questions about key issues relevant to how companies will operationalize this requirement, including what tools work, what information is “reasonably available,” which risk factors should be taken into account, and how companies should identify indirect business partners. The Commission also explicitly asks about practical and legal obstacles and conflicts hindering information collection for this two-step process, providing companies with a clear opportunity to highlight due diligence barriers they may face in third countries. On risk prioritization, the consultation asks stakeholders to identify situations where the severity or likelihood of an adverse impact is particularly difficult to assess, and what other elements are relevant to support companies in navigating these decisions. This will be a key point of interest, as companies seek reassurance that a documented, good-faith prioritization process will be respected in an enforcement context.
2. Model Contractual Clauses: Flexibility vs. Standardization
The issue: The Commission must publish model contract clauses for voluntary use to facilitate the implementation of due diligence obligations and, where relevant, the seeking of contractual assurance from business partners (Article 18). A key tension is whether the model clauses will remain genuinely voluntary and flexible reference tools, or whether they will evolve into a de facto compliance benchmark against which companies’ contractual practices are assessed.
Open for consultation: The consultation asks how the model contractual clauses should allocate tasks and costs between in-scope companies and their business partners, including in cross-border settings. Companies with complex contractual practices across global supply chains, limited leverage over larger counterparties, and/or relationships governed by third-country laws might consider this a key area for engagement.
3. Remediation and Joint Causation
The issue: Under the CSDDD due diligence framework, companies that have “caused or jointly caused” an actual adverse impact must provide remediation (Article 12) (defined as financial or non-financial restoration of affected person(s), communities, or the environment to a situation equivalent, or as close as possible, to the situation they would have been in had the actual adverse impact not occurred, proportionate to the company’s implication in the impact). The scope of the remediation obligation is expected to generate significant discussion, including in key areas of uncertainty, such as whether a remediation obligation attaches independently of any procedural due diligence failing.
Open for consultation: The consultation requests input on best practices for determining a company’s proportionate involvement when it jointly causes an impact together with business partners or other companies.
4. Responsible Disengagement
The issue: The CSDDD requires engagement with business partners and a focus on preventing and addressing adverse impacts rather than immediate disengagement where there may be human rights and environmental risks. However, the law also provides that, as a measure of last resort when all other measures have failed, business relationships must be suspended until the impact is addressed, under the condition that suspension would not lead to a manifestly more severe human rights or environmental harm than the one that could not be addressed.
Open for consultation: The consultation recognizes that companies may at times opt not to disengage in an effort to avoid more severe impacts, and invites companies to provide concrete examples of situations where such a decision was taken and how it was managed in practice. The Commission’s guidance on how companies should document and justify these decisions will be important, as it may influence what a defensible process looks like if that decision is later questioned by a supervisory authority or in litigation. The consultation also invites input on purchasing practices, which are similarly likely to be key to due diligence expectations around contractual arrangements with business partners.
5. Third-Party Verification and Industry Initiatives
The issue: The CSDDD allows companies to use third-party verification and participate in industry or multi-stakeholder initiatives to support their due diligence. While the CSDDD does not anticipate a procedure for formal Commission recognition of particular initiatives, any Commission guidance on what makes an initiative “fit for purpose” is likely to have significant practical implications for how companies can leverage collective action, and whether reliance on such tools will provide any meaningful comfort in enforcement or litigation contexts.
Open for consultation: The consultation asks questions about fitness criteria to assess such initiatives, such as independence, competence, governance, and accountability, as well as where existing initiatives fall short. While not expressly provided for in this context, the European Network of Supervisory Authorities could also emerge as a body that implicitly shapes how schemes are assessed in practice.
6. Due Diligence in Conflict-Affected and High-Risk Areas (“CAHRAs”)
The issue: The consultation pays significant attention to due diligence in conflict-affected and high-risk areas, as defined in accordance with Regulation (EU) 2017/821. The CSDDD refers to the need to “adapt” due diligence to the context of “conflict-affected and high-risk areas” (Recital 42) and the Commission is required to issue guidance specifically on risk factors associated with CAHRAs (Article 19(2)(d)). The extent to which CAHRAs may alter human rights and environmental due diligence expectations for companies operating in or sourcing from fragile contexts is a less tested area of existing regulatory frameworks (though there is a significant body of non-binding guidance on the subject). From a practical standpoint, companies will need clarity about how their due diligence efforts might need to be adjusted in relation to CAHRAs.
Open for consultation: The consultation acknowledges that companies may experience difficulties in identifying “high-risk” situations, and in an effort to assist companies in making this determination, asks for input on operational challenges (data limitations, safety risks, legal conflicts), how companies should identify “high-risk” contexts beyond active conflict zones, and how conflict analysis should be integrated into the due diligence process. Given the absence of references to CAHRAs in the operative CSDDD text (besides the requirement for the Commission to prepare guidance on the subject), this may be one area in particular where the Guidelines significantly shape due diligence expectations.
7. Supervisory Authority Guidance and Penalties
The issue: The CSDDD introduces a decentralized enforcement architecture: each Member State must designate one or more supervisory authorities to monitor compliance with the Directive’s due diligence obligations (Article 24). These authorities will have broad enforcement powers, including the ability to initiate investigations, order companies to cease infringements, require remedial action, and impose pecuniary penalties of up to 3% of net worldwide turnover. A European Network of Supervisory Authorities, coordinated by the Commission, will facilitate cross-border cooperation and alignment of supervisory practices across Member States. The Commission must also issue guidance on penalty setting. Whether the Guidelines define the factors for determining fines and address the interplay between regulatory enforcement and civil liability under national law will be watched closely by companies assessing their CSDDD risk exposure.
Open for consultation: The consultation includes a dedicated section of the questionnaire for supervisory authorities to complete on enforcement challenges, penalty-setting, and cooperation among supervisory authorities. It explicitly asks for input drawing on experience with other enforcement regimes, such as deforestation, minerals, product safety, etc.
Other Issues
The consultation invites submissions on a range of other issues that, depending on industry and a company’s position in the value chain, may also be of interest. These include: challenges of defining “living wage,” specific issues for small and medium-sized enterprises (“SMEs”), the challenges of sharing information and data with business partners, and stakeholder engagement.
Looking Ahead
The six-week consultation window is tight, and the breadth of topics covered is substantial. The Commission’s questionnaire signals that it is seeking granular, evidence-based input, and the Guidelines that result will set the practical parameters for CSDDD compliance for years to come. Companies seeking to shape the Guidelines should begin preparing data-driven submissions without delay. Companies should also bear in mind that in practice, the Commission will be expected to consult and discuss the Guidelines with Member States, offering an additional opportunity for engagement.
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If you have questions about the Commission’s consultation, the guidelines, or how the CSDDD applies to your business, please reach out to our Corporate Sustainability team.