The European Union has introduced a series of directives to help businesses reach sustainability goals, as part of the EU-wide ambition of becoming climate-neutral by 2050. Two of the most widely discussed are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Designed to complement each other, the two directives share a common purpose but differ in important ways.

A shared aim

Both directives are part of the EU's broader effort to drive corporate accountability on sustainability. The CSRD provides companies with a framework for measuring and managing their impacts, risks, and opportunities, centred on the concept of double materiality, reflecting both the impact of sustainability issues on the company, and the company's impact on people and the environment. It covers a wide range of topics and culminates in an annual sustainability report that companies are required to publish publicly.

The CSDDD, as amended by the Omnibus I package, entered into force on 26 February 2026 and applies to all in-scope companies from 26 July 2029. It requires companies to implement specific due diligence processes addressing their impacts on human rights and the environment not only within their own operations, but also in those of their subsidiaries and their business partners across the chain of activities. Downstream, this coverage is limited to distribution, transport and storage.

Both directives emphasise transparency and accountability. Companies subject to either must demonstrate meaningful efforts to measure, manage, and disclose their impacts, risks, and opportunities.

Reporting requirements

Although the two directives differ in focus, they were deliberately designed to overlap rather than create parallel, entirely separate compliance workstreams.

The CSRD is a reporting directive — it sets out what companies must disclose about their operations and management approaches. Reporting is aligned with the European Sustainability Reporting Standards (ESRS), which cover Environmental, Social, and Governance topics. Each company identifies its material topics, assesses them based on double materiality, and publishes a comprehensive annual sustainability report structured similarly to a financial report.

The CSDDD is an action-oriented directive — it requires companies to put specific processes in place, holding them accountable for their business conduct and setting a higher standard for due diligence. Its core requirement is the identification of actual and potential adverse human rights and environmental impacts across their own operations, their subsidiaries and their business partners in the chain of activities. When both directives apply to the same company, reporting obligations can be combined into a single report, as the information required significantly overlaps.

Omnibus: what has changed

The CSRD's scope has been significantly revised under the EU's Omnibus I package, signed into law in February 2026. The original tiered structure — which would have brought in companies with 250+ employees or listed SMEs — has been replaced with a narrower set of thresholds. The CSDDD has been narrowed even further and now applies only to the very largest companies.

The Omnibus reforms have widened the gap between the two directives: the CSDDD now applies only to companies with 5,000+ employees and €1.5bn+ turnover, compared with 1,000+ employees and €450m+ turnover for the CSRD. As a result, many companies reporting under the CSRD will not be in scope of the CSDDD.

2 directives, 1 goal

For companies subject to both directives, there is significant overlap in the information required, and it is strongly recommended not to treat them as separate compliance exercises. Data gathered for CSRD reporting — particularly on value chain risks and due diligence processes — will often feed directly into CSDDD due diligence as well, although reporting does not replace the due diligence actions themselves.

The key distinction remains one of focus. The CSRD provides a comprehensive overview of impacts both on and by the company across all ESG topics. The CSDDD zooms in specifically on human rights and environmental impacts across the chain of activities, and places the emphasis on taking action not just reporting.

Key Takeaways

There are many misconceptions about sustainability directives adding complexity without reward. In practice, companies subject to more than one directive often find significant overlap in requirements, making data management and reporting more efficient than expected and yielding genuine insight into operations and the value chain in the process.

These directives are also an opportunity to redefine how your company measures success. Transparency and accountability carry more commercial weight than ever before. Used strategically, compliance with both the CSRD and CSDDD can become a genuine competitive advantage.