ESRS and CSDDD: Reporting, Due Diligence and Value Chain Responsibilities Compared

Prepared in British English as a practitioner Knowledge Card Package: answer, explanation, application, evidence, connections and publishing layer.

The language of impacts, value chains, stakeholders, actions and remediation appears in both regimes. That creates a tempting shortcut: build one due diligence process, describe it once, and assume the organisation has met both sets of obligations. The shortcut is unsafe.

A sustainability statement may accurately describe a policy and still reveal that the policy is not implemented effectively. Conversely, a company may perform extensive due diligence but omit material ESRS information, use the wrong reporting boundary or fail to explain methods and limitations. The reporting team, legal team and operational owners therefore need a shared evidence base without collapsing the two legal conclusions into one.

The revised ESRS state expressly that ESRS specify sustainability information to be disclosed and do not mandate behaviour other than behaviour connected with reporting. Reporting under ESRS also does not release an undertaking from separate due diligence obligations under Union law. This is the cleanest starting point for the comparison.

CSDDD, by contrast, requires Member States to ensure that in-scope companies conduct risk-based human rights and environmental due diligence. The required actions include integrating due diligence into policies and risk management, identifying and assessing impacts, prioritising where necessary, preventing and mitigating potential impacts, bringing actual impacts to an end or minimising them, providing remediation in defined circumstances, engaging stakeholders, maintaining notification and complaints mechanisms, monitoring effectiveness and communicating publicly.

The practical consequence is simple:

• ESRS asks for a fair presentation of material impacts, risks and opportunities and how the undertaking manages them.

• CSDDD creates duties to establish and operate a due diligence process and take appropriate measures.

Neither conclusion should be inferred from the other without testing the applicable legal requirements and facts.

From financial years beginning on or after 1 January 2027, the amended CSRD scope applies to undertakings that exceed both EUR450 million net turnover and an average of 1,000 employees during the financial year, including at consolidated group level where applicable. For the 2025 and 2026 financial years, Member States may use a derogation to exempt first-wave undertakings that fall below the new thresholds. Every group should therefore maintain a dated legal-scope conclusion by entity, jurisdiction and reporting period.

The amended CSDDD has a much higher general threshold: more than 5,000 employees and more than EUR1.5 billion net worldwide turnover for EU companies, with corresponding group, non-EU and franchising or licensing tests. Member States must transpose the CSDDD amendments by 26 July 2028 and apply measures from 26 July 2029, while the communication provisions apply for financial years starting on or after 1 January 2030.

These timelines mean many organisations will report under ESRS before they become directly subject to CSDDD. Even so, their ESRS disclosures may already describe due diligence, business relationships, affected stakeholders, actions and remediation. The reporting should describe the process that actually exists; it should not imply early legal compliance with CSDDD unless the company has completed a specific legal assessment and chooses carefully qualified wording.

Both regimes benefit from a common impact inventory. A robust inventory records the affected people or environmental receptors, location, business activity or relationship, value-chain position, actual or potential status, severity factors, likelihood, source evidence, responsible owner, actions and current status.

The inventory should then feed two controlled analyses.

ESRS analysis

The double materiality assessment determines whether impacts, risks or opportunities are material and which topics and information are reportable. Due diligence information is an important input: the revised ESRS explain that impact identification and assessment performed in due diligence informs the assessment of material negative impacts for reporting. The resulting disclosure must still pass ESRS information-materiality and fair-presentation tests.

CSDDD analysis

CSDDD requires a risk-based scoping exercise using reasonably available information to identify general areas where adverse impacts are most likely and most severe, followed by an in-depth assessment in those areas. If the company cannot address all identified adverse impacts simultaneously and fully, prioritisation is based on severity and likelihood.

The same underlying incident or risk may therefore have different statuses in the two systems. It may be material for ESRS reporting, prioritised for CSDDD action, both, or neither after the relevant tests. The system should store each conclusion separately rather than overwrite a single field called “material”.

ESRS requires useful disclosure about stakeholder interests and views and, where relevant, how engagement informed strategy, the materiality assessment and management of material impacts. The quality of the disclosure depends on specific evidence: who was engaged, why, on what issues, how barriers were addressed, what was heard, what changed and what limitations remained.

CSDDD goes further by requiring effective engagement and consultation at defined stages. These include gathering information to identify, assess and prioritise impacts; developing prevention and corrective action plans; and adopting remediation measures. Consulted stakeholders may request additional relevant information, and a refusal requires written justification. Where effective stakeholder engagement is not reasonably possible, credible expert input is required as an additional source.

A shared engagement programme should therefore distinguish:

1. engagement used to understand impacts and inform the ESRS materiality assessment;

2. consultation undertaken to satisfy a CSDDD process step;

3. routine commercial engagement with suppliers or customers;

4. grievance, notification or remedy interactions requiring confidentiality and protection from retaliation.

Under ESRS, the organisation reports the policies and actions it has in place for material matters. The standard does not convert a reported policy into a conduct obligation, nor does it allow an organisation to imply effectiveness merely because a policy exists. Balanced reporting may need to identify coverage gaps, delayed actions, resource constraints, unresolved incidents and outcomes that did not meet expectations.

Under CSDDD, policy integration and appropriate measures are substantive duties. Depending on the circumstances, measures may include prevention or corrective action plans, investments, operational changes, contractual assurances, support to business partners, collaboration and, as a last resort and subject to safeguards, suspension of business relationships. Where the company caused or jointly caused an actual adverse impact, remediation is required; where a business partner alone caused it, the company may provide voluntary remediation and use leverage.

A grievance mechanism is evidence of a channel, not evidence that all impacts have been identified, that complaints were handled fairly, or that remediation was effective. The evidence chain should connect the concern to assessment, decision, action, communication, outcome and closure review.

A practical integrated model has six layers.

Figure 2. Comparison of ESRS reporting and CSDDD due diligence responsibilities. Branded educational visual by London Reporting Academy.

Governance rule

The integrated process may have one steering committee, one data platform and one evidence register. It should still require separate sign-off from the sustainability reporting owner and the legal or compliance owner. The board should receive a paper that distinguishes:

• what the organisation has done;

• what the ESRS sustainability statement discloses;

• what is required under current national law;

• what remains part of future CSDDD readiness;

• where evidence or remediation is incomplete.

Context. A diversified manufacturer receives credible reports that migrant workers at an indirect supplier paid recruitment fees and had passports retained. The supplier sits in a high-risk geography and produces a component with several alternative sources.

Available evidence. Worker interviews by an independent organisation, procurement records, an audit report, the supplier code, grievance records and correspondence with the direct supplier.

ESRS work. The company assesses the potential and actual impacts on value-chain workers, considers severity and likelihood, evaluates whether the matter is material and determines the disclosures needed under ESRS S2 and general requirements. The reporting team describes the issue, boundary, response and limitations without identifying workers or making unsupported effectiveness claims.

CSDDD work. The due diligence team records the matter as identified, performs the required assessment, determines whether it is caused, jointly caused or linked through a business partner, develops appropriate measures, engages affected stakeholders or representatives, considers remediation, uses leverage and monitors outcomes. Legal counsel tests the decision against the applicable national implementing law.

Shared evidence. The impact record, engagement evidence, action plan, supplier communications and outcome indicators support both workstreams.

Separate conclusions. “This impact is material under ESRS” is not the same statement as “the company has fulfilled all CSDDD obligations”. Each conclusion has its own criteria and approval.

1. Using one scope spreadsheet for both regimes without separate legal logic. Add regime-specific scope fields, dates, group tests and legal approval.

2. Calling every business relationship part of the same perimeter. Map the relationship once, then apply ESRS value-chain and CSDDD chain-of-activities definitions separately.

3. Treating the materiality matrix as the due diligence action plan. Materiality supports reporting decisions; action prioritisation requires its own rationale, owners, timing and follow-up.

4. Using supplier questionnaires as the primary evidence for high-risk impacts. Combine supplier information with independent sources, worker or community input, grievance data and expert evidence.

5. Equating policy coverage with implementation. Track implementation, non-conformance, resources, outcomes and remediation.

6. Publishing a broad compliance statement before national transposition is analysed. Use controlled readiness language and obtain legal sign-off.

7. Leaving confidential due diligence evidence in the public reporting workspace. Separate public, restricted, privileged and personal-data records while preserving traceability.

• Revised ESRS 1: objective, entity-specific disclosures, fair presentation, double materiality, due diligence and value-chain reporting.

• Revised ESRS 2 GOV-3: statement showing where the main due diligence steps are disclosed. In the 2023 ESRS, the equivalent disclosure is GOV-4.

• Revised ESRS 2 GOV-4: risk management and internal controls over sustainability reporting. In the 2023 ESRS, this is GOV-5.

• ESRS 2 SBM-2 and IRO-1: stakeholder interests and views; materiality assessment process.

• GDR-P, GDR-A, GDR-M and GDR-T: policies, actions, metrics and targets for material topics.

• ESRS S2, S3 and S4: value-chain workers, affected communities, consumers and end-users.

• CSDDD Articles 5 and 7-16: due diligence actions, policy integration, identification, prioritisation, prevention, corrective action, remediation, engagement, complaints, monitoring and communication.

Does CSDDD replace ESRS due diligence disclosures?

No. CSDDD creates conduct duties. ESRS determines what material information is disclosed and how it is presented. CSDDD evidence can support ESRS disclosures, but the reporting requirements remain separate.

Can one impact assessment support both?

Yes, one inventory and evidence-gathering process can support both. The organisation should apply separate criteria, record separate outcomes and obtain separate approval for each legal conclusion.

Does a CSRD reporter need a separate CSDDD annual website statement?

CSDDD Article 16 exempts companies subject to specified Accounting Directive sustainability reporting requirements, including certain exempt group entities, from the separate annual statement. The organisation must still confirm that the exemption applies to its facts and national implementation.

Is supplier audit evidence enough?

Usually not on its own. High-quality evidence may also require affected-stakeholder input, grievance information, independent sources, operational data, remediation records and outcome monitoring.