How CSDDD and CSRD Shaping Corporate Responsibility

Table of Index

• The Strategic Link Between CSDDD and CSRD 

• Advancing Supply Chain Sustainability through Integration 

  • Leveraging Neutral Entities and Verified Certification Systems 

  • Deploying Collaborative Digital Infrastructure 

  • Developing Organizational Toolkits for Compliance and Value Creation 

• Traceability as the Shared Backbone of CSRD and CSDDD 

• Regulatory Compliance as a Foundation for Long‑Term Resilience: How Koltiva Helps Your Company  

Across Europe and in global supply chains linked to its markets, deforestation and environmental harm driven by commercial activity remain persistent challenges. These issues are increasingly understood not only as environmental concerns, but as sources of legal, financial, and human‑rights risk embedded in how goods are produced and traded. In response, the European Union has introduced a new wave of sustainability regulations aimed at tightening corporate accountability and improving transparency across international value chains. 

As sustainability regulation accelerates, two EU directives are redefining what “good corporate practice” actually means: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). At first glance, they can look like overlapping layers of compliance. In reality, they represent a deliberate shift in expectations, from what companies say about sustainability to what they do about their impacts, risks, and responsibilities across the value chain. 

Corporate Sustainability Due Diligence Directive (CSDDD) sets the expectation for action. It is a due diligence legislation requiring companies to identify, prevent, reduce and end negative human rights and environmental impacts in their operations and value chain, and to provide remedies when harm occurs. This is about responsibility in practice, not policy. Companies are expected to understand where risks sit, take reasonable steps to address them, and show that those steps are working. In effect, CSDDD makes clear that sustainability commitments only matter if they translate into real-world outcomes. 

The CSDDD stands as a crucial initiative aimed at addressing deforestation and broader environmental and human rights risks by requiring companies to implement risk-based due diligence across their operations and value chains, and by establishing civil liability where companies fail to comply with their due diligence obligations and harm results. On April 24th, 2024, the European Parliament approved this directive following prior negotiations with the Council, with 374 votes in favor, 235 opposed, and 19 abstentions (European Parliament, 2024) 

Complementing the CSDDD is the Corporate Sustainability Reporting Directive (CSRD) that underpins this accountability with transparency. It moves sustainability reporting beyond broad ESG narratives toward structured, auditable disclosures aligned with the European Sustainability Reporting Standards (ESRS). A central concept is double materiality: companies must assess both how sustainability issues affect their financial performance and how their activities impact people and the environment. The aim is to produce ESG data that is consistent, comparable, and decision‑useful, so investors, regulators, and markets can see not just what companies claim to do, but how those claims hold up in practice (Ethical Supply Chains, 2025) 

In short, while the CSDDD mandates risk-based human rights and environmental due diligence obligations, the CSRD ensures transparency for European firms (transparent about how they do it). 

The Strategic Link Between CSDDD and CSRD 

The CSDDD and CSRD are closely interconnected within the EU’s sustainable finance and corporate accountability framework, but they serve distinct legal functions. The CSDDD is aligned with internationally recognized responsible business conduct standards, particularly the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, and requires companies to implement risk-based human rights and environmental due diligence across their operations and value chains. The CSRD complements this by mandating standardized, auditable sustainability disclosures under the European Sustainability Reporting Standards (ESRS), ensuring transparency on how companies identify, manage, and report material impacts and risks. Together, the two directives create a reinforcing structure in which due diligence obligations and sustainability reporting function as complementary pillars of EU corporate sustainability governance.  

Advancing Supply Chain Sustainability through Integration 

To meet the expectations of the CSDDD and CSRD as part of corporate sustainability and social responsibility, companies must move beyond compliance as a box‑ticking exercise and embed sustainability into their supply chain operations. Companies are expected to identify, prevent, mitigate, and communicate potential negative impacts on human rights and the environment with transparency and accountability. However, many companies still have a significant distance to cover. 

A Bain survey in 2020 found that fewer than 15% of executives believe their existing capabilities enable them to consistently achieve traceability (Bain and Company, 2020). While most companies have initiated the development of traceability capabilities, they encounter challenges in integrating them and consistently generating value. The main challenges include data reliability, standardization issues, technological gaps, and organizational barriers. Overcoming these challenges requires stronger collaboration among stakeholders to align standards, share investments, streamline processes, and establish a common language and data model across supply chains. 

To address these barriers, executives can focus on several practical enablers: 

• Leveraging Neutral Entities and Verified Certification Systems 

  Data sharing across supply chains is essential to effective due diligence but remains constrained by competitive sensitivities and trust. Neutral entities, such as industry associations or independent platforms, can facilitate data exchange by providing governance structures that reduce perceived commercial risk. In parallel, robust certification and verification mechanisms play a critical role in substantiating claims related to sourcing, production practices, and environmental performance. Independent certification providers can verify inputs, processes, and analytical outputs, thereby enhancing data credibility and supporting defensible compliance with regulatory requirements. 

• Deploying Collaborative Digital Infrastructure 

  Digital platforms designed for multi‑stakeholder engagement can support the integration of supply chain data across actors and geographies. When operated by specialized technology providers responsible for system architecture, maintenance, and commercialization, such platforms can enable scalable data collection, interoperability, and controlled access. This infrastructure is increasingly necessary to support continuous due diligence processes and timely, auditable reporting under the CSRD. 

 

• Developing Organizational Toolkits for Compliance and Value Creation 

  Beyond technical systems, companies must also address internal capability gaps. Structured toolkits that define roles, governance processes, and system requirements can support the operationalization of due diligence and reporting obligations. By linking sustainability data to risk management, procurement, and strategic decision‑making, companies can move beyond minimum compliance and enhance organizational resilience while meeting regulatory expectations. 

Traceability as the Shared Backbone of CSRD and CSDDD 

CSRD and CSDDD are often discussed as separate obligations, one for reporting, the other for due diligence. In reality, they are designed to operate as a single system, powered by a shared traceability backbone. CSRD defines what companies must understand and disclose through double materiality and standardized ESG data, while CSDDD defines how companies must act on those insights through risk‑based prevention, mitigation, and remediation across the value chain. Traceability is the connective tissue that allows both directives to function as one integrated compliance architecture rather than parallel exercises.  

“From a practical standpoint, the same traceability data underpins both regimes. Origin‑level visibility, supplier relationships, and transaction histories enable companies to identify material impacts and risks under CSRD, and then apply proportional due diligence under CSDDD to the very same hotspots. Without a shared traceability layer, companies risk duplicating effort—reporting sustainability risks they cannot substantiate, or conducting due diligence they cannot credibly evidence. The regulatory architecture suggests that disclosure and due diligence are designed to reinforce one another, not operate in isolation,” said Andre Mawardhi, our Senior Manager Agriculture and Environment. 

This is why digital traceability is increasingly becoming a practical enabler of effective EU sustainability compliance, rather than merely a sustainability add-on. As agri-commodity and food supply chains face expanding regulatory scrutiny, traceability systems can serve as a critical data backbone supporting both CSRD disclosures and CSDDD due diligence processes through consistent, verifiable supply chain information. For companies that approach this as a unified traceability architecture, compliance can evolve from a fragmented obligation into a durable organizational capability, strengthening governance, supplier engagement, and long-term market access. 

Regulatory Compliance as a Foundation for Long‑Term Resilience: How Koltiva Helps Your Company  

The combined implementation of the CSDDD and CSRD reflects a broader regulatory transition toward mandatory corporate accountability for sustainability impacts. Companies that proactively invest in integrated due diligence systems, reliable traceability mechanisms, and credible data governance will be better positioned to manage regulatory risk, respond to stakeholder scrutiny, and adapt to evolving sustainability requirementsWe stand prepared to become the leading global platform, empowering businesses to interact with their suppliers and gain access to vital supply chain data essential for compliance with current and future regulations. Curious to learn more? Talk to our expert! 

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Author: Gusi Ayu Putri Chandrika Sari, Social Media Practitioner at KOLTIVA

Co-author: Kumara Anggita 

Expert Sources: Andre Mawardhi  is the Senior Manager of Agriculture & Environment at KOLTIVA

Gusi Ayu Putri Chandrika Sari combines her expertise in digital marketing and social media with a deep commitment to sustainability, supported by over eight years of experience in communications. Her work focuses on crafting impactful narratives that connect technology, agriculture, and environmental responsibility. She is driven by a passion for promoting sustainable practices through compelling, audience-focused content across a variety of digital platforms.

Andre Mawardhi  is the Senior Manager of Agriculture & Environment at KOLTIVA, where he leads sustainable agriculture strategies and environmental compliance across global supply chains. With over a decade of experience in agri-environmental systems, Andre specializes in integrating climate-smart practices, traceability frameworks, and regenerative farming into multi-stakeholder ecosystems. His work bridges scientific insight with on-the-ground impact, ensuring smallholder inclusion and compliance with emerging regulations like the EU Deforestation Regulation (EUDR). Passionate about transforming food systems from the ground up, Andre plays a key role in shaping data-driven, sustainable sourcing solutions that benefit both producers and the planet.  

References: 

• European Parliament. (2024, April 24). Due diligence: MEPs adopt rules for firms on human rights and environment (Press release). https://www.europarl.europa.eu/news/en/press-room/20240419IPR20585/due-diligence-meps-adopt-rules-for-firms-on-human-rights-and-environment 

• Ethical Supply Chain Program. (2025, August 29). CSRD & CSDDD: Turning EU compliance into supply chain transparency. EthicalSupplyChain.org. https://www.ethicalsupplychain.org/news-events/csrd-csddd-turning-eu-compliance-into-supply-chain-transparency 

• Betti, F., Saenz, H., & Stephan, J. (2025). Four ways industry can make supply chains more sustainable (originally published on World Economic Forum). Bain & Company. https://www.bain.com/insights/four-ways-industry-can-make-supply-chains-more-sustainable-wef/