The hidden financial cost of weakening EU CSDDD
- Marion Bitoune
- Nov 12
- 2 min read
Updated: Nov 23
On 13 November, the European Parliament endorsed reduced reporting and due diligence requirements, lifting the CSDDD threshold to 5,000 employees and €1.5bn in revenue.
Trilogues on Omnibus I started on November 18th, and negotiations are expected to wrap up in early December.
At the heart of the debate lies one question: how far should the law reach, and at what cost?
So far, discussions on thresholds have focused on administrative burden, not on the financial consequences of narrowing the law’s scope.
In France, AlphaYoda’s analysis shows that raising the CSDDD threshold to 5,000 employees and €1.5 billion in turnover would exclude 52% of the companies initially included in the original scope of the directive, including a quarter from the manufacturing sector, one of the industries most exposed to supply-chain controversies.
For listed firms, a high-severity controversy wipes out an average of around €5 million in market value over two months (–0.8%), and up to €16 million over a year (–2.3%).
Beyond these market losses come reputational, litigation, and operational costs, risks that are cumulative, the very cascade the CSDDD is designed to prevent.
While most research to date has focused on the CSRD and disclosure requirements, AlphaYoda turns the spotlight on the CSDDD, analysing what dilution of the directive would mean for companies, investors, and Europe’s competitiveness.
Figure 1: Under the proposed thresholds (Council and Parliament), France would move from 328 to 159 companies in scope, yet the total turnover covered would fall, from €2.8 trillion to €2.6 trillion.
The AlphaYoda case study provides one of the first data-driven assessments of the financial cost of excluding companies from due diligence obligations, or, put differently, the cost of not managing ESG risks.
Our report summarizes the latest policy developments, identifies the sectors in France that are most at risk of exclusion, provides an overview of the companies concerned, and quantifies the financial risks associated with failing to identify, prevent, mitigate, and remediate adverse human rights and environmental impacts across operations and supply chains.
It ultimately shows that robust due diligence is not only a moral or legal responsibility, but also a lever for better risk management and competitiveness.
Download the full study:
