Article 4: Due diligence: scope, process and liability

Article 4 raises the CSDDD thresholds, narrows the harmonisation rule, changes the risk assessment and last-resort measures, and moves the reporting and ESAP dates.

The article makes twenty-two changes to the Corporate Sustainability Due Diligence Directive. The scope threshold in Article 2(1)(a) becomes more than 5,000 employees on average and a net worldwide turnover above EUR 1.5 billion in the last financial year. The franchise and licensing route in Article 2(1)(c) requires royalties above EUR 75 million and a worldwide group turnover above EUR 275 million. The third-country route in Article 2(2) uses a Union turnover above EUR 1.5 billion, or royalties above EUR 75 million with a Union turnover above EUR 275 million.

Article 4 replaces the level-of-harmonisation rule. Member States may not introduce diverging national provisions in the fields covered by Articles 6, 8 and 9, Article 10(1) to (5), Article 11(1) to (6) and Articles 14 to 16. They may be more stringent or more specific outside those provisions. This matters to a group operating in several Member States: the core process is fixed, while some surrounding duties can differ.

The process changes are practical. A parent may perform the obligations of Articles 7 to 16 for in-scope subsidiaries where that achieves effective compliance, without removing the subsidiary's exposure to supervision or civil liability (Article 6). The identification duty becomes a scoping exercise based on reasonably available information, followed by an in-depth assessment of the areas where impacts are most likely and most severe (Article 8(2)). New Article 8(2a) limits information requests: only where necessary, and for business partners below 5,000 employees only where the information cannot reasonably be obtained another way. Article 8(4) is deleted. New Article 9(4) protects a documented prioritisation decision from penalties for a less significant impact that was not addressed. Articles 10(6) and 11(7) rewrite the last-resort measures: no new or extended relationship, suspension where the governing law allows, and an enhanced prevention or corrective action plan, with an assessment of whether suspension would cause manifestly more severe harm. Article 13(3) narrows the stages at which stakeholders must be consulted. Article 15 requires periodic monitoring at least every five years and after a significant change.

Reporting and enforcement move later. Article 16(3) requires delegated acts on the content and criteria of the annual statement by 31 March 2029, aligned with the ESRS and avoiding duplication with the Sustainable Finance Disclosure Regulation. Article 17 requires submission to the European single access point from 1 January 2031, with a collection body designated by 31 December 2030. Article 18 moves the model contractual clauses to 26 July 2027. Article 19 moves the guidelines to 26 July 2027 and 26 July 2028. Article 22 is deleted. Article 24 requires a supervisory authority and notification by 26 July 2028. Article 25 requires adequate powers and resources. Article 27(4) sets the maximum pecuniary penalty at 3 percent of net worldwide turnover. Article 29 removes the civil liability provision in paragraph 1, keeps full compensation without overcompensation, and removes several defences. Article 37 sets transposition by 26 July 2028 and application from 26 July 2029, with Article 16 applying to financial years starting on or after 1 January 2030.

Why it matters

A company can be in the CSRD scope and the CSDDD scope at the same time, but the two tests and dates differ. Conflating them produces a plan that is wrong in both directions: it can miss the due diligence duties of a company below the reporting threshold, or assume a reporting duty that the CSDDD does not create.

Dates

Transposition for Article 4 is due by 26 July 2028, later than the 19 March 2027 date for Articles 1 to 3. The measures apply from 26 July 2029. The Article 16 reporting duty applies to financial years starting on or after 1 January 2030. ESAP submission starts on 1 January 2031.

What to do

• Test the CSDDD threshold separately from the CSRD threshold and record both answers.
• Rewrite the supplier questionnaire to respect the necessity and 5,000 employee limits in Article 8(2a).
• Put the 2028 transposition and 2029 application dates in the plan, not the 2027 date.

The duty records in Article 4

Source

Article 4, amending Directive (EU) 2024/1760, Directive (EU) 2026/470, OJ L 2026/470, 26 February 2026. Our statement, not the instrument verbatim.

Not legal advice; does not certify. A reading of the article and the duties inside it, not a substitute for the Official Journal text or the national transposing measure.