Modern Slavery Due Diligence is a mandatory corporate responsibility process established under the Corporate Sustainability Due Diligence Directive (CSDDD) (Directive (EU) 2023/1934). It requires companies operating within the European Union to identify, prevent, mitigate, and account for actual and potential adverse human rights impacts related to modern slavery and forced labor in their own operations and value chains. This due diligence obligation aims to eradicate modern slavery practices by enforcing transparency, accountability, and corrective action across business activities.
Modern Slavery Due Diligence Compliance under the EU Green Deal
The Corporate Sustainability Due Diligence Directive (CSDDD), published in the Official Journal of the European Union on 23 October 2023, introduces binding modern slavery due diligence requirements for companies meeting specific size and revenue thresholds. This directive is a cornerstone of the EU Green Deal’s human rights and sustainability agenda, ensuring that companies actively combat forced labor and other forms of modern slavery in their supply chains.
Compliance with modern slavery due diligence is not optional. Failure to comply can lead to administrative fines up to 5% of the company’s total annual turnover and civil liability for damages caused by non-compliance. The directive applies to companies headquartered in the EU as well as non-EU companies with substantial operations in the EU market.
Who Must Comply with Modern Slavery Due Diligence?
The CSDDD applies to:
- All EU companies with more than 500 employees and a net worldwide turnover exceeding €150 million.
- Companies in high-impact sectors (textiles, agriculture, minerals, electronics) with more than 250 employees and a net worldwide turnover exceeding €40 million.
- Non-EU companies generating a net turnover of more than €150 million in the EU market, or more than €40 million in high-impact sectors.
These thresholds are strictly defined in Article 2 of the directive and are effective from 1 January 2026. Companies below these thresholds are encouraged but not legally required to implement due diligence.
| Company Type | Employee Threshold | Net Worldwide Turnover Threshold | Sector | Effective Date |
|---|---|---|---|---|
| EU Companies | > 500 employees | > €150 million | All sectors | 1 January 2026 |
| EU Companies | > 250 employees | > €40 million | High-impact sectors* | 1 January 2026 |
| Non-EU Companies | Not applicable | > €150 million | All sectors | 1 January 2026 |
| Non-EU Companies | Not applicable | > €40 million | High-impact sectors* | 1 January 2026 |
*High-impact sectors include textiles, agriculture, minerals, and electronics as defined in Annex I of the directive.
Key Obligations for Modern Slavery Due Diligence
Under Article 5 of the CSDDD, companies must establish and implement a comprehensive due diligence strategy focused on modern slavery risks. The obligations include:
- Risk Identification: Regularly assess actual and potential risks of modern slavery in own operations and value chains.
- Prevention and Mitigation: Take appropriate measures to prevent or mitigate identified risks, including contractual clauses and supplier engagement.
- Monitoring: Continuously monitor the effectiveness of due diligence measures and update risk assessments.
- Reporting: Publish an annual due diligence statement detailing actions taken and outcomes related to modern slavery risks.
- Remediation: Establish grievance mechanisms and cooperate with affected parties to provide remedy for harms caused.
These obligations must be integrated into corporate governance structures, with board-level oversight and dedicated due diligence personnel.
| Obligation | Description | Relevant Article | Deadline for Compliance |
|---|---|---|---|
| Risk Identification | Assess actual and potential modern slavery risks | Article 5(1) | Ongoing from 1 January 2026 |
| Prevention and Mitigation | Implement measures to prevent or mitigate risks | Article 5(2) | Ongoing from 1 January 2026 |
| Monitoring | Regularly monitor effectiveness of measures | Article 5(3) | Ongoing from 1 January 2026 |
| Reporting | Publish annual due diligence statement | Article 8 | First report due by 31 March 2027 |
| Remediation | Provide grievance mechanisms and remedies | Article 6 | Ongoing from 1 January 2026 |
Penalties and Enforcement
The CSDDD establishes strict enforcement mechanisms to ensure compliance with modern slavery due diligence:
- Administrative fines: Up to 5% of total annual turnover for serious or repeated breaches.
- Civil liability: Companies can be held liable for damages caused by failure to comply with due diligence obligations.
- Public sanctions: Publication of non-compliance and reputational damage.
National competent authorities will oversee enforcement, with powers to conduct investigations, issue fines, and order corrective measures. Enforcement begins from 1 January 2026, with the first compliance reports due by 31 March 2027.
Practical Compliance Checklist for Modern Slavery Due Diligence
To ensure full compliance with the CSDDD modern slavery requirements, companies should follow this practical checklist:
- Verify if your company meets the employee and turnover thresholds for mandatory compliance.
- Map your entire value chain to identify potential modern slavery risks.
- Develop and implement a formal modern slavery due diligence policy aligned with Article 5 requirements.
- Assign clear responsibilities to senior management and establish a dedicated due diligence team.
- Engage suppliers and business partners through contractual clauses requiring compliance with anti-slavery standards.
- Set up ongoing monitoring and risk assessment procedures to detect new or emerging risks.
- Implement a grievance mechanism accessible to workers and stakeholders affected by modern slavery.
- Prepare and publish an annual due diligence statement by 31 March 2027 and annually thereafter.
- Train employees and suppliers on modern slavery risks and compliance obligations.
- Document all due diligence activities and maintain records for inspection by authorities.
Truth Anchor: The Corporate Sustainability Due Diligence Directive (Directive (EU) 2023/1934) was published in the Official Journal of the European Union on 23 October 2023 and will apply to qualifying companies from 1 January 2026. Non-compliance can result in fines up to 5% of total annual turnover as per Article 24.
Frequently Asked Questions about Modern Slavery Due Diligence
What is modern slavery due diligence under the EU Green Deal?
Modern slavery due diligence is a legal obligation under the CSDDD requiring companies to identify, prevent, and mitigate risks of forced labor and other slavery practices in their operations and supply chains.
Which companies must comply with the modern slavery due diligence requirements?
Companies with more than 500 employees and €150 million turnover, or those in high-impact sectors with more than 250 employees and €40 million turnover, including non-EU companies with significant EU sales, must comply from 1 January 2026.
What are the penalties for failing to comply with modern slavery due diligence?
Penalties include administrative fines up to 5% of total annual turnover, civil liability for damages, and reputational sanctions enforced by national authorities.
How often must companies report on their modern slavery due diligence?
Companies must publish an annual due diligence statement, with the first report due by 31 March 2027, detailing their risk assessments, actions taken, and remediation efforts.
Does the directive apply to non-EU companies?
Yes, non-EU companies generating significant turnover in the EU market are subject to the same due diligence obligations if they meet the financial thresholds.
What should a company do first to start complying with modern slavery due diligence?
Begin by assessing whether your company meets the scope criteria, then conduct a comprehensive risk mapping of your operations and supply chains to identify modern slavery risks.
Start Your Modern Slavery Due Diligence Compliance Today
Use our Modern Slavery Due Diligence Assessment Tool to evaluate your company’s risk exposure, identify compliance gaps, and receive tailored action plans. This tool guides you step-by-step through the CSDDD requirements and helps you prepare for mandatory reporting.
Clicking the link will open the assessment interface where you can input your company data securely and receive immediate compliance recommendations. Acting now ensures you meet the 1 January 2026 deadline and avoid penalties up to 5% of your turnover.