Directive (EU) 2024/1760, adopted by the European Union (referred to below simply as the Directive), covers a narrower set of companies than the German Supply Chain Due Diligence Act, since Omnibus I ((EU) 2026/470) raised the thresholds to 5,000 employees and EUR 1.5 billion in turnover, though it sets out a more detailed catalogue of due diligence obligations. It was adopted as Directive (EU) 2024/1760 and then substantially amended by the Omnibus I directive ((EU) 2026/470) of February 2026. As it now stands, its scope is confined to EU companies with more than 5,000 employees and more than EUR 1.5 billion in net worldwide turnover, and to third-country companies with more than EUR 1.5 billion in net turnover in the Union (as of July 2026).
The purpose of the Directive
The purpose of the Directive is to make companies take a sustainable and central role, through the way they do business, in delivering the European Green Deal programme and the United Nations’ human and environmental rights standards. On the Directive’s own account, that purpose is achieved by remedying and mitigating the risks and adverse developments that can arise in value chains (Wertschöpfungsketten) and harm human rights and the environment; and, over the longer term, by bringing companies’ resilience, their effects on the climate and the environment, and human rights into sustainable alignment — which in turn requires the right decisions to be taken at management and board level.
Why the scope was drawn so widely
The Directive starts from the premise that individual companies would struggle to do this alone, particularly those that operate globally and source from suppliers all over the world. It therefore brings almost every globally active company in the European Union within the due diligence obligation. As its recitals put it: “The fact that the European Union economy is connected with millions of workers involved in global value creation all over the world also entails the responsibility of exercising sustainable due care for the rights of workers as well. Similar legislative movements observed in European Union member states also point to the existence of a desire and a need for such regulation.”
Large companies in the European Union already carry out due diligence among their own suppliers voluntarily, without any legal compulsion, and take the subject seriously. The Directive is intended to support those voluntary efforts, and with them the moves towards framework legislation on corporate due diligence that have been visible in EU member states in recent years.
The objectives the Directive pursues
The Directive’s objectives are, in particular:
- to improve corporate governance so that practice and risk management are built into corporate strategy, and so reduce the human rights and environmental risks and impacts that arise from value creation;
- to prevent the due diligence obligation from fragmenting across the internal market, and to create legal certainty as to what conduct is expected and where liability lies;
- to increase companies’ liability for adverse impacts and to keep their obligations consistent with existing and planned EU initiatives on responsible business conduct;
- to improve access to legal remedies for those affected by the human rights and environmental impacts of companies’ conduct;
- to complement other measures already in force that address particular sustainability challenges or that relate directly to specific sectors within the Union — the Directive being a horizontal instrument, in that it focuses on corporate processes and applies across value chains.
Other EU instruments to be amended
The Directive will also amend a number of the European Union’s other directives. Several ancillary directives and regulations are expected to be improved and/or amended in the process, among them those on human trafficking and the protection of victims (2011/36/EU), measures against employers (2009/52/EU) and eco-design (2009/125/EU), and the directive regulating battery waste (KOM/2020/798).
A pillar of social rights, and proportionality
The Directive is an attempt to establish a “fundamental pillar of social rights” in business life within the European Union. The EU is alive to the additional burden this may place on companies.
The obligation is therefore framed proportionately. Companies are required only to take “appropriate measures proportionate to the degree of severity of the adverse impacts”, and small and medium-sized companies fall outside the Directive’s scope altogether. The details follow in the relevant sections below; here it is enough to note that the two-group threshold model of the 2022 Commission proposal did not enter the adopted text, and that scope is now determined by the single threshold set out above. A further point of importance is that companies not established in the European Union are caught by a single test as well — the net turnover they generate within the Union. The detail follows in the relevant sections below.
