Skip to main content
Marsh logo

Article

Is your supply chain ready for CS3D? What the Corporate Sustainability Due Diligence Directive means

Prepare for CS3D with stronger supply chain due diligence, better supplier risk visibility, and practical steps to support compliance and resilience.

16/09/2026 · 3 minute read

Following the adoption of the EU’s Omnibus package, which aims to simplify and recalibrate elements of its sustainability reporting, due diligence, and sustainable finance framework to reduce administrative burden and support European competitiveness, organisations should now prepare for the enforcement of the amended Corporate Sustainability Due Diligence Directive (CS3D). While the Omnibus is intended to streamline compliance obligations, the CS3D will continue to establish a significant due diligence framework for in-scope organisations. It will require them to identify, assess, prevent, mitigate, and remediate adverse human rights and environmental impacts across their operations, subsidiaries, and value chains.

What is the CS3D?

According to its stated objectives, the CS3D aims to foster sustainable and responsible corporate behaviour in business operations across global value chains.

From July 2029, the law will require organisations to conduct due diligence, monitoring, and remediation related to environmental and human rights impacts across their supply chains. This is provided they meet the following thresholds:

  • EU organisations: more than 5,000 employees and net worldwide turnover exceeding €1.5 billion; or
  • Non-EU organisations: generating more than €1.5 billion in turnover within the EU.

Why it matters to organisations

Despite the simplifications introduced by the Sustainability Omnibus, significant obligations remain under the CS3D.

Organisations will have to conduct a scoping exercise based on reasonably available information to identify areas across their operations, subsidiaries, and relevant business partners and suppliers where adverse impacts are most likely and most severe. Information requests to business partners are restricted to what is necessary, with additional safeguards for those employing fewer than 5,000 employees.

Penalties for non-compliance can be up to 3% of net worldwide turnover. Civil liability will apply under national law, with affected persons retaining the right to compensation. Each member state will be responsible for enforcing the rules, and the European Commission will establish a network of collaboration among national authorities to support consistent enforcement and interpretation.

The amended CS3D will place greater scrutiny on supply chains, especially for organisations operating across multiple jurisdictions and supplier tiers. Organisations will need better visibility over their supplier base, clearer governance, and more disciplined processes to identify and address environmental and human rights risks.

In practice, this means moving towards a more targeted, risk-based approach to due diligence. Organisations will need to prioritise higher-risk suppliers, strengthen data collection, and ensure remediation actions are tracked and evidenced. Procurement, legal, compliance, and sustainability teams will need to work more closely together, with contract terms and supplier onboarding processes likely to come under review.

Impact on global trade

The EU’s top trade partners have raised concerns that the CS3D could lead to regulatory overreach because of its global range.

Despite the passage of the Sustainability Omnibus, important discussions remain regarding the application of the CS3D. There are questions around how the rules apply to non-EU businesses that do not place products on the EU market, the designation of jurisdictions presumed to comply with EU law, and the definition of “stakeholders.”

The member states must enact the CS3D into their respective national laws by July 2028 and must enforce it by July 2029.

How Marsh can support your organisation

Although the CS3D has been amended to prevent excessive burdens, organisations affected by the directive should monitor developments closely to ensure they are prepared for compliance.

Marsh can help organisations prepare for CS3D by strengthening supply chain resilience and due diligence across the business. This may include assessing environmental, human rights, and third-party risks; prioritising higher-risk suppliers; designing governance, controls and reporting; advising on insurance and risk transfer; and aligning procurement, legal, and sustainability teams. Marsh’s Sentrisk can also help companies see deeper into supplier tiers, spot vulnerabilities, and model the impact of disruption. A structured approach now can improve compliance, transparency, resilience, and business continuity.

Speak with a Marsh risk advisor about CS3D readiness and supply chain resilience.

Contact

Related insights

Plane approaches runway at airport

Article

Navigating Europe’s aviation supply chain risk: Building resilience in uncertain times

15/09/2026
Code writing in laptop

Report

AI without blind spots: the 2026 Marsh European AI Opportunities and Risk Survey Report

04/08/2026
A view of a rapidly developing modern city

Article

Cyber risks and AI: the ECB requires an action plan by 31 October 2026

31/07/2026
Business meeting with team in blue-lit conference room

Article

From regulatory constraint to strategic compass: Why the EU AI Act can strengthen organisations and HR

19/06/2026
View more