CS3D for Transport & Logistics

What is CS3D?

The Corporate Sustainability Due Diligence Directive (CS3D) is a landmark piece of European Union legislation that requires large companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts throughout their value chains. Adopted in 2024, the directive introduces legally binding obligations that go far beyond voluntary reporting, compelling businesses to take concrete action on sustainability risks in their own operations and those of their business partners. Companies that fail to comply face significant financial penalties and civil liability.

CS3D and the Transport & Logistics Industry

The transport and logistics sector sits at the heart of global supply chains, making it one of the industries most directly affected by CS3D. Every product that crosses a border, moves through a warehouse, or reaches a consumer's doorstep involves logistics providers who now share responsibility for the sustainability practices embedded in those supply chains.

Transport and logistics companies face unique exposure under CS3D for several reasons. First, the industry relies heavily on subcontracting. A freight forwarder may work with dozens of carriers, warehouse operators, and last-mile delivery providers across multiple jurisdictions. Under CS3D, the contracting company cannot simply outsource its due diligence obligations along with the work. If a subcontracted trucking company in a third country employs drivers under exploitative conditions or uses vehicles that cause severe environmental harm, the primary logistics provider may be held accountable.

Second, transport is inherently carbon-intensive. Road freight, maritime shipping, and air cargo collectively account for a significant share of global greenhouse gas emissions. CS3D requires companies to adopt transition plans aligned with the Paris Agreement's 1.5-degree target, which means logistics firms must demonstrate credible decarbonisation strategies rather than relying on offset programmes alone.

Third, the sector's global reach means constant interaction with regions where human rights risks are elevated. Port operations in countries with weak labour protections, mineral transport from conflict-affected areas, and warehousing operations that depend on temporary or migrant labour all represent concrete risk areas that logistics companies must now systematically address.

Consider a European freight company that contracts maritime shipping through Southeast Asian ports. If dockworkers at those ports face unsafe conditions or forced overtime, the European company has a duty under CS3D to identify that risk, engage with the port operator, and take corrective action. Ignoring the issue is no longer a viable legal position.

Key Requirements

CS3D imposes several specific obligations on companies operating in or serving the transport and logistics sector:

• Supply chain mapping and risk identification: Companies must map their upstream and downstream value chains, identifying where adverse human rights and environmental impacts are most likely to occur. For logistics firms, this includes subcontracted carriers, fuel suppliers, vehicle manufacturers, warehouse operators, and port authorities.
• Due diligence policy adoption: Firms must establish and maintain a due diligence policy that describes their approach to identifying and addressing risks. This policy must be integrated into corporate strategy, not treated as a standalone compliance document.
• Prevention and mitigation measures: When potential adverse impacts are identified, companies must take appropriate action to prevent them. This could mean requiring contractual assurances from subcontractors, conducting on-site audits of warehouse facilities, or switching to carriers with verified safety records.
• Cessation of ongoing harm: If a company discovers that an adverse impact is already occurring within its value chain, it must act to bring it to an end. In the logistics context, this might involve terminating a contract with a carrier found to be using forced labour, or discontinuing routes that pass through ecologically protected areas without adequate safeguards.
• Complaints mechanism: Companies must establish a procedure through which affected persons, trade unions, and civil society organisations can raise concerns about adverse impacts. A logistics company might receive a complaint from drivers employed by a subcontractor about unsafe vehicles or excessive working hours.
• Climate transition plan: Companies must adopt a plan to ensure that their business model and strategy are compatible with the transition to a sustainable economy and the Paris Agreement's temperature targets. For transport firms, this means setting measurable emissions reduction targets and investing in fleet modernisation, alternative fuels, or modal shift strategies.
• Monitoring and reporting: Regular assessments of the effectiveness of due diligence measures are required. Companies must track whether their interventions actually reduce risk, not merely document that policies exist on paper.
• Stakeholder engagement: Meaningful consultation with affected stakeholders, including workers, communities, and business partners, is required at multiple stages of the due diligence process.

Implementation Steps for Transport & Logistics Companies

Preparing for CS3D compliance requires a structured approach. The following steps provide a practical roadmap for transport and logistics businesses:

1. Determine whether your company falls within scope. CS3D applies on a phased basis, starting with the largest companies (over 5,000 employees and EUR 1,500 million net turnover from 2027) and progressively covering smaller entities (over 1,000 employees and EUR 450 million turnover from 2029). Even if your company is below the thresholds, you may still be affected as a business partner of an in-scope company that will require due diligence information from you.
2. Map your entire value chain. Document every business relationship involved in your operations: vehicle and fuel suppliers, subcontracted carriers and freight forwarders, warehouse and terminal operators, customs brokers, last-mile delivery partners, and maintenance providers. Prioritise relationships based on geography, sector risk, and the nature of the services provided.
3. Conduct a risk assessment. For each category of business partner, identify the most likely and most severe adverse impacts. In road transport, key risks include driver fatigue and working time violations, vehicle safety standards, and emissions. In maritime logistics, risks extend to port labour conditions, ballast water management, and ship recycling practices. Use established frameworks such as the OECD Due Diligence Guidance for Responsible Business Conduct to structure your analysis.
4. Integrate due diligence into contracts and procurement. Update your standard contracts with subcontractors and suppliers to include sustainability clauses. Require adherence to specific labour standards, environmental performance criteria, and reporting obligations. Build due diligence criteria into your procurement scoring when selecting new carriers or warehouse partners.
5. Establish a complaints mechanism. Create an accessible channel through which workers, communities, and other stakeholders can report concerns. This can be a dedicated email address, a third-party hotline, or a digital platform. Ensure the mechanism is available in languages relevant to your operational geographies and that complainants are protected from retaliation.
6. Develop your climate transition plan. Calculate your Scope 1, 2, and 3 emissions with particular attention to transport-related Scope 3 categories. Set science-based reduction targets. Identify concrete measures such as transitioning to electric or hydrogen-powered vehicles, optimising route planning to reduce empty kilometres, investing in intermodal transport solutions, and collaborating with clients on shipment consolidation.
7. Build internal governance structures. Assign clear responsibility for due diligence oversight at the management or board level. Train procurement, operations, and compliance teams on CS3D requirements and the specific risks relevant to transport and logistics. Allocate budget for audits, monitoring technology, and stakeholder engagement activities.
8. Monitor, evaluate, and report. Implement key performance indicators to track the effectiveness of your due diligence measures. Review your risk assessment at least annually, or whenever significant changes occur in your value chain. Prepare to disclose your due diligence activities in accordance with the Corporate Sustainability Reporting Directive (CSRD), which complements CS3D's disclosure expectations.

Frequently Asked Questions

Does CS3D apply to small and medium-sized logistics companies?

CS3D directly applies to companies meeting specific size and turnover thresholds. However, small and medium-sized enterprises (SMEs) in the logistics sector will be indirectly affected. Large in-scope companies will need to conduct due diligence on their business partners, which means they will increasingly require SME subcontractors to provide information about their labour practices, environmental performance, and risk management. SMEs that proactively prepare will have a competitive advantage in retaining contracts with larger clients.

How does CS3D differ from the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) focuses on disclosure and transparency, requiring companies to report on sustainability matters. CS3D goes further by requiring companies to take action. While CSRD asks "what are your impacts and risks?", CS3D demands "what are you doing to prevent and address them?" The two directives are designed to work together: the due diligence processes required by CS3D generate the data and evidence that companies report under CSRD.

What are the penalties for non-compliance?

Member States must establish effective, proportionate, and dissuasive penalties. The directive sets a maximum fine of at least 5% of worldwide net turnover for the most serious infringements. Additionally, CS3D introduces civil liability provisions, meaning companies can be sued for damages resulting from a failure to conduct adequate due diligence. For a logistics company, this could mean liability for environmental damage caused by a subcontractor's operations or for human rights abuses in a partner's workforce.

Can a logistics company be held liable for the actions of its subcontractors?

CS3D does not impose automatic liability for every adverse impact in a company's value chain. However, a company can be held liable if it failed to take appropriate due diligence measures and that failure contributed to the adverse impact. If a logistics provider knew, or should have known, about dangerous working conditions at a subcontracted warehouse but took no action, it could face legal consequences. The directive creates a strong incentive to actively monitor and engage with business partners rather than adopting a passive approach.

Summary

The Corporate Sustainability Due Diligence Directive represents a fundamental shift in how transport and logistics companies must approach sustainability across their value chains. With binding obligations covering human rights, environmental protection, and climate transition planning, the time for voluntary commitments alone has passed. Companies that begin mapping their value chains, strengthening contractual safeguards, and building robust due diligence systems now will not only meet their legal obligations but will position themselves as trusted partners in an increasingly sustainability-conscious market.