The Future of Supply Chain Due Diligence: Key EU Regulations to Watch in 2025

As global supply chains become increasingly complex, regulatory bodies are tightening compliance requirements through various diligence legislation to ensure ethical and sustainable sourcing. In the European Union (EU), several key regulations are set to shape the landscape of supply chain due diligence in 2025 and beyond. Businesses operating within or trading with the EU must stay ahead of these evolving requirements to remain compliant and competitive considering business and human rights

Introduction to Due Diligence

Due diligence is a systematic process that organizations undertake to identify, prevent, mitigate, and account for how they manage both actual and potential adverse impacts concerning ethical, labor, human rights, and environmental aspects. In the context of supply chains, due diligence obligations are becoming increasingly important as companies are expected to ensure that their business operations do not contribute to human rights violations or environmental degradation. The OECD Due Diligence Guidance for Responsible Business Conduct provides a framework for companies to follow in their due diligence process, emphasizing the importance of risk assessment, supply chain mapping, and risk management.

Corporate Sustainability Due Diligence Directive (CSDDD) (EU) 2024/1760

The Corporate Sustainability Due Diligence Directive (CSDDD) represents one of the most comprehensive legislative efforts to enforce corporate due diligence obligations and responsible business conduct. Adopted in June 2024, the directive mandates that large companies integrate due diligence measures to identify, prevent, and mitigate adverse human rights and environmental impacts across their supply chains.

Who Must Comply?

• EU-based companies with over 1,000 employees and an annual global turnover exceeding €450 million.

• Non-EU companies that generate more than €450 million in turnover within the EU market.

Additionally, companies with a statutory seat in the EU must adhere to these requirements regardless of their global turnover.

Key Compliance Requirements

• Conduct risk assessments and report on due diligence processes.

• Implement corrective action plans for supply chain violations under diligence guidance

• Establish grievance mechanisms for affected stakeholders.

• Prepare an annual report detailing the identified risks, measures taken, and compliance with the directive reduces the risk assessment

Member states are required to transpose the directive into national law by July 2026, with phased enforcement beginning in 2027. However, some EU member states, such as France and Germany, have called for delays due to economic concerns (Reuters, 2025).

Supply Chain Due Diligence

Supply chain due diligence refers to the examination and evaluation of every step in the supply chain process to manage ethical and environmental risks. It involves a close look at suppliers, manufacturers, logistics, and other aspects to identify and manage risks, ensure compliance with regulations, and improve transparency and accountability in the supply chain. The German Supply Chain Act, for example, imposes due diligence obligations on companies to prevent or end human rights or environmental violations in their supply chains. Companies must conduct a risk analysis, identify and mitigate risks, and take preventive measures to meet their requirements under the Act which also reduces risk assessment

EU Deforestation Regulation (EUDR) (EU) 2023/1115

The EU Deforestation Regulation (EUDR), set to take effect in December 2024, will significantly impact companies dealing with commodities linked to deforestation, emphasizing the need to manage environmental impact. Businesses must ensure their products do not originate from land subjected to deforestation after December 2020.

Affected Commodities

Palm oil, cattle, soy, coffee, cocoa, timber, and rubber

Derived products (e.g., leather, furniture, chocolate, paper)

Failure to comply could lead to market bans and substantial fines. The European Commission has proposed a one-year extension for large companies and an additional six-month grace period for smaller businesses, pending approval (Time, 2025).

Companies must ensure responsible sourcing practices to comply with the EUDR and avoid contributing to deforestation.

Prohibiting Products Made with Forced Labour Regulation (EU) 2024/3015

Adopted in late 2024, this regulation aims to eliminate products made with forced labor from the EU market. Regulatory authorities will have the power to investigate and remove non-compliant products.

In addition to forced labor, companies must also ensure that their supply chains are free from child labor to comply with this regulation.

What Businesses Need to Do

• Conduct risk assessments on suppliers.

• Provide traceability documentation proving ethical sourcing.

• Cooperate with authorities during compliance investigations.

This initiative aligns with global efforts to combat forced labor, particularly in industries such as electronics, textiles, and agriculture (Reuters, 2025).

Batteries and Waste Batteries Regulation (EU) 2023/1542

As part of its circular economy strategy, the EU introduced stricter regulations on battery sustainability in August 2023. This law will impact supply chains in 2025 as enforcement expands.

Ensuring compliance with these regulations is crucial for maintaining business continuity in the affected sectors also reduces risk assessment in company's supply chain

Key Compliance Factors

• Sustainable sourcing of raw materials such as lithium, cobalt, and nickel.

• Recycling and waste management obligations for battery producers.

• Carbon footprint reporting for large battery manufacturers acts as supply chain actors in a protected legal positions with identified risk include direct supplier where potential risk and diligence practices manage risks which involves due diligence strategy

• Ensure ethical practices in sourcing and production to meet regulatory standards and conduct supply chain also maintain human rights

Companies in the automotive, electronics, and renewable energy sectors must adapt their procurement and production processes to meet these standards.

Benefits of Due Diligencein competent authority

The benefits of due diligence include identifying and mitigating risks associated with the supply chain, ensuring that suppliers and subcontractors adhere to ethical standards and laws, and avoiding legal action or negative publicity associated with unethical or illegal activities. Due diligence also helps companies ensure that their supply chain is efficient and cost-effective, reduce costs and increase profits, and protect their reputation by identifying and addressing potential issues in the supply chain. By conducting due diligence, companies can also comply with industry regulations and laws, such as the EU Supply Chain Due Diligence Directive, and ensure a responsible and sustainable supply chain. Additionally, due diligence can help companies to identify opportunities for improvement and to develop a competitive advantage in the market also in Company's supply chain in risk management system

Looking Ahead: Compliance Trends in 2025

As the EU refines its approach to supply chain due diligence, businesses should anticipate additional developments: like oecd due diligence guidance along with diligence practices and potential risk in due diligence strategy

Developing a robust diligence strategy will be essential for companies to navigate these future compliance trends in due diligence obligations in human rights

1. Regulatory Adjustments

Ongoing debates may lead to revisions or implementation delays as policymakers weigh sustainability goals against economic challenges in due diligence obligations with direct supplier which conduct supply chain

The competent authority will play a crucial role in monitoring and enforcing these regulatory adjustments also keeping in mind due diligence process which consist os diligence obligations

2. Expansion of Due Diligence Requirements

Expect due diligence obligations to expand beyond large corporations to include smaller enterprises and more industries, ensuring greater accountability. As these diligence obligations apply to more industries and smaller enterprises, companies must be prepared to meet these expanded requirements reduces risk management

3. Enhanced Enforcement Mechanisms

With increased audits, penalties, and reporting requirements, enforcement will be a priority for regulators in 2025.

Regulatory bodies will likely adopt a risk based approach to prioritize enforcement actions based on the level of compliance risk in due diligence obligations where direct supplier also manage risk

Conclusion: Preparing for the Future

The evolving regulatory landscape requires companies to proactively integrate compliance measuresinto their supply chains. Businesses should invest in oecd due diligence guidance

• AI-powered compliance tools to monitor supply chain risks and also responsible business conduct in diligence guidance in supply chain mapping

• Supplier engagement strategies to ensure regulatory alignment.

• Robust documentation practices to demonstrate due diligence efforts in supply chain mapping

Due diligence is an ongoing process that requires continuous monitoring and adaptation to stay compliant with evolving regulations also featuring business and human rights and due diligence obligations in human rights in entire supply chain in legal obligations cater to environmental and human rights where direct supplier ,risk identified and ethical practices are part of supply chain act

At Certivo, we help companies navigate these challenges with AI-driven compliance solutions, ensuring businesses remain ahead of regulatory changes and competitive in the EU market.

For more insights on supply chain compliance, contact us today or explore our compliance management platform which focus on due diligence obligations in risk management in human rights

Sources

1. Reuters (2025)— EU countries are split over whether to delay green reporting rules.

2. Time (2025) – Deforestation Europe: How the EUDR will impact global supply chains in diligence obligations in risk management along with human rights

3. Reuters (2025)— The US paper industry asks for lighter EU deforestation rules.