Due Diligence Explained: What It Is, Why It’s Mandatory, and How to Manage It at Scale

Due diligence is one of those terms that gets used constantly in business, but its meaning has shifted dramatically over the past few years. If you’re a sustainability manager, there’s a good chance the phrase now lands differently on your desk than it does in a boardroom conversation about mergers and acquisitions.

• Supply chain due diligence is a continuous legal obligation, not a one-time check, covering human rights and environmental risks across your entire supplier network.
• National laws and EU directives have made non-compliance costly, with civil liability, mandatory remediation, and audit requirements already in force or imminent.
• Manual management cannot keep pace with the scale and documentation demands; purpose-built software is the only realistic path to defensible compliance.

What is Due diligence? From one-time checks to ongoing supply chain obligations

Traditionally, due diligence referred to the investigative process a company carries out before making a significant business decision, typically an acquisition, investment, or partnership. Think financial audits, legal reviews, liability checks: a finite exercise with a clear endpoint.

That definition hasn’t disappeared. But a second, broader meaning has emerged, one that sustainability professionals are increasingly expected to own: ongoing human rights and environmental due diligence across the entire supply chain.

This isn’t a one-time check. It’s a continuous process of identifying, preventing, mitigating, and accounting for actual and potential adverse impacts on people and the planet, from your direct suppliers all the way down to raw material extraction.

Supply chain due diligence is now mandatory: how the EU Omnibus impacts companies

For years, supply chain due diligence was framed as best practice. Companies that did it earned ESG credits and stakeholder goodwill. Companies that didn’t faced little formal consequence.

That era is over.

A wave of national legislation has established binding due diligence obligations across Europe. Germany’s Supply Chain Due Diligence Act (LkSG) was among the first, followed by similar frameworks in France, Norway, Switzerland, and others. The scope, thresholds, and specific requirements differ by country, but the underlying logic is consistent: companies must actively identify and address human rights and environmental risks in their supply chains, and they must be able to prove it.

At EU level, the Corporate Sustainability Due Diligence Directive (CSDDD) introduced civil liability, mandatory remediation obligations, and a scope that extends to downstream business relationships. The Omnibus I simplification package, formally adopted by the European Parliament in December 2025, has adjusted some of these parameters: CSDDD will now apply to companies with more than 5,000 employees and a net turnover of at least EUR 1.5 billion, with application postponed to July 2029. The focus shifts to parts of the value chain where actual or potential adverse impacts are most likely.

What the Omnibus did not change is the underlying expectation. Investor requirements, partner due diligence requests, and board-level accountability for supply chain risks remain firmly in place. And for companies already within scope, the obligation to manage and document due diligence processes is ongoing now.

CSRD, also adjusted under Omnibus I, requires standardized, auditable disclosure of sustainability-related risks. The reporting threshold has increased, but for companies still in scope — more than 1,000 employees and EUR 450 million in turnover — due diligence data feeds directly into reporting requirements.

Why manual due diligence management breaks down at scale

Here’s where operational reality sets in. Most sustainability managers already know the pain.

A typical company doesn’t have ten suppliers. It has hundreds, often thousands, spread across multiple tiers and geographies. Each relationship needs to be assessed for risk. Documents need to be collected, reviewed, and kept current. Red flags need to be tracked. Remediation steps need to be logged. And all of it needs to be audit-ready in a format that regulators and external auditors can verify.

Managing this through spreadsheets, shared drives, and email threads doesn’t just create inefficiency, it creates exposure. Gaps in documentation stay invisible until they aren’t. Supplier questionnaires go unanswered for months. Risk assessments go stale. When an auditor asks for evidence of corrective action on a flagged supplier from 18 months ago, “it’s somewhere in an email chain” is not a compliant answer.

Manual processes also make prioritization almost impossible. Without a structured view of where your highest risks sit, by geography, commodity, or supplier tier, sustainability teams end up spending equal energy on low-risk relationships while genuinely problematic ones go under-reviewed.

The bottom line: Due diligence is a continuous process

Due diligence meaning has evolved. It’s no longer a pre-deal checklist but an ongoing operational responsibility with legal weight behind it. For sustainability managers, the question is no longer whether to do it, but how to do it in a way that’s scalable, defensible, and built to keep pace with the regulatory environment as it continues to develop.

Due Diligence Software That Works: How osapiens HUB Meets Compliance Needs

Given the scale and complexity of supply chain due diligence, purpose-built software isn’t a luxury. It’s a prerequisite. But not every solution is built for what compliance actually requires. Here’s what to look for, and how osapiens HUB addresses each requirement.

1. Automated supplier assessments.
   You need a system that sends, tracks, and processes assessments systematically, not one that relies on your team chasing responses manually. The osapiens HUB handles this automatically, improving response rates and freeing your team for analysis rather than administration.
2. Risk scoring and prioritization.
   Effective due diligence isn’t about treating every supplier equally. You need structured risk scores based on supplier data and external signals, so high-risk relationships surface without manual hunting. The osapiens HUB gives sustainability teams a clear, prioritized view of where attention is needed most.
3. Traceable remediation tracking.
   When a risk is identified, regulations require you to show what action was taken, by whom, and when. The osapiens HUB creates a complete, traceable record of every remediation step — the documentation backbone that manual processes almost never produce cleanly.
4. Regulatory alignment out of the box.
   Your software needs to map to the actual requirements of CSDDD, CSRD, and relevant national legislation, so the outputs of your due diligence process translate directly into evidence and reporting formats your compliance team can use. osapiens HUB is built for exactly this.
5. Audit-ready documentation.
   Everything logged, versioned, and accessible. When regulators or auditors come asking, you have a complete, structured record ready to present.

Ready to simplify supply chain due diligence?

Take the guesswork out of compliance and scale your due diligence processes with the osapiens HUB for Supply Chain Compliance.

Designed to meet the operational requirements of supply chain due diligence, it maps supplier data against human rights and environmental risk indicators and sends and tracks structured self-assessments aligned with the Corporate Sustainability Due Diligence Directive (CSDDD), the German Supply Chain Due Diligence Act (LkSG), and other national frameworks.

Click here to learn more about how the osapiens HUB supports scalable supply chain due diligence.