Myth
The CSDDD creates new reporting obligations.

Reality
The CSDDD does not introduce a new sustainability reporting regime. Instead, it builds on the transparency framework already established under the CSRD. The focus of the CSDDD is not reporting, but action: identifying, prioritising and addressing human rights and environmental risks through a structured, risk-based due diligence process, aligned with the OECD Guidelines for Multinational Enterprises. While companies may need to communicate how they manage risks, the directive is fundamentally about improving outcomes in practice, not adding another layer of reporting.

Myth
SMEs won’t be able to cope with the requirements of this regulation.

Reality
SMEs remain outside the legal scope of the CSDDD and are not required to comply directly. While SMEs may still be indirectly affected through their relationships with large customers, the revised directive now includes stronger safeguards to reduce unnecessary burden. Companies must rely first on reasonably available information, limit information requests to what is genuinely necessary, and avoid overwhelming smaller partners with excessive or duplicative demands. Where engagement with SMEs is needed, larger companies are encouraged to provide support and capacity building, rather than simply passing obligations down the chain.

Myth
Full upstream supply chain transparency is required immediately.

Reality
The CSDDD promotes a risk-based methodology for determining where companies should first focus their efforts. Companies are expected to identify risks and assess them based on severity and likelihood. This way, they can prioritise their impacts and corresponding mitigation efforts. Companies must assess risks across multiple dimensions, such as geographic location, supply chain activities, and supplier performance. The scope includes a company’s operations, subsidiaries and business partners linked to specific segments of the value chain. Companies are required to prioritise the most severe risks, understand causes and mitigate these risks first. While less severe risks require less immediate attention and transparency, companies are still expected to continuously enhance their understanding of supply chain risks and work towards mitigating them over time.

Myth
There is no business case for corporate sustainability due diligence anymore.

Reality
Even under the revised CSDDD, due diligence remains central to responsible and resilient business. While the Omnibus agreement reduced some legal exposure at EU level, companies may still face financial penalties, enforcement actions, contractual consequences, litigation under national laws and reputational damage if they fail to manage serious human rights and environmental risks. Strong due diligence also helps companies prevent costly disruptions, maintain investor and customer trust, secure market access and remain competitive in public procurement and partnerships. Beyond compliance, companies that can demonstrate credible, risk-based due diligence are better positioned for stable supply chains, capital access and talent retention.

Myth
The CSDDD only applies to supply chains.

Reality
The CSDDD goes beyond traditional “supply chain” thinking. It applies across a company’s chain of activities, covering its own operations, subsidiaries and both direct and indirect business partners. Adverse impacts may arise not only upstream, but also within a company’s facilities or large projects such as mines, data centres or construction sites, as well as through downstream activities. Companies are expected to understand where they may cause, contribute to or be linked to harm, and to prioritise the most likely and severe risks using a risk-based approach.

Myth
The CSDDD will make foreign trade extremely difficult.

Reality
No — the CSDDD does not aim to restrict trade. Disengagement and withdrawal are explicitly considered last-resort measures and should only be used when other efforts to prevent or mitigate harm are ineffective, and when withdrawal would not create greater harm. The directive emphasises a risk-based approach, prioritisation and collaboration, not cutting ties. Companies are expected to work with suppliers to improve practices, encourage respect for human rights and environmental standards, and support capacity building rather than immediately terminating relationships. In practice, this approach can actually strengthen long-term trading relationships by promoting trust, stability and responsible business conduct.