From Compliance Cost to Competitive Advantage: What France’s LOI de Vigilance Tells Us About the CSDDD and CSRD

Evidence from France’s supply chain due diligence law challenges the assumption that mandatory sustainability obligations hurt the bottom line – and points the way to how companies can benefit from CSDDD and CSRD.

The debate around the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) has been dominated by concerns about cost, bureaucracy, and competitive disadvantage. What has been largely absent from that conversation is hard empirical data.

That gap is beginning to close, and the evidence may surprise some critics.

A new long-term study of France’s Loi de Vigilance offers some of the clearest evidence yet that binding due diligence obligations, when implemented effectively, can generate real operational benefits. For companies navigating the CSDDD and CSRD today, the findings are directly relevant.

France’s Loi de Vigilance: A Real-World Preview of the CSDDD

Since 2017, France’s Loi de Vigilance has required large companies to identify human rights and environmental risks across their supply chains, implement preventive measures, and report publicly, with civil liability for non-compliance.

The parallels with the CSDDD are striking: a risk-based approach, a focus on human rights and environmental due diligence, and obligations to act, not just to disclose. In many ways, the Loi de Vigilance is the CSDDD’s closest predecessor, making it an ideal testing ground for what the EU-wide framework might deliver.

Companies subject to Germany’s Supply Chain Due Diligence Act (LkSG) will recognise the landscape: heightened requirements for risk analysis, preventive action, and cross-supply-chain reporting. The CSDDD raises the stakes further.

What the Research Found

The study by Durach and Wang analysed 73 listed French companies over 17 years (2006–2023), comparing their performance against structurally similar companies across eight European countries. This longitudinal design allows something most previous research could not: a view of how effects change over time.

The headline findings break down into three areas:

• Short-term costs are real but manageable. After the Loi de Vigilance came into force, input costs rose measurably. Governance structures, risk analyses, supplier integration, and internal controls all require upfront investment. Companies should plan for this, but the data shows these effects are temporary.
• Efficiency gains follow. As supply chain integration deepens, costs relative to sales fall significantly and permanently. The study records an average efficiency improvement of around 10% over the follow-up period. This is not a reputational effect or a capital market signal – it is an operational finding.
• Revenue and growth are not penalised. Neither revenue nor asset utilisation suffered as a result of the regulation. The data do not support the widely held concern that mandatory due diligence restricts business agility.

Global Corroboration: The UNDP & WBA Study

The French findings are reinforced by a large-scale United Nations Development Programme study conducted in partnership with the World Benchmarking Alliance (WBA). Analysing 235 companies across high-risk sectors globally, the research found that improvements in human rights due diligence have no negative effect on competitiveness.

In fact, companies that substantially expanded their due diligence systems reported measurable improvements in return on assets, while margins, cash flows, and market valuations remained stable. The key insight mirrors the French study: initial investments in governance and supply chain management are offset and exceeded over time.

Taken together, these two studies point to a consistent pattern. Due diligence obligations are not inherently a cost factor – they generate value through better management, reduced vulnerability to disruption, and more efficient use of resources.

What This Means for CSDDD and CSRD Programs

The CSDDD is about management, not just compliance. The evidence shows that economic benefits flow not from ticking compliance boxes, but from genuinely integrating due diligence into procurement, risk, and operational decision-making. That is precisely the intent of the CSDDD – and where its value will be realized or lost.

The CSRD creates discipline. By requiring companies to document, measure, and make processes externally verifiable, the CSRD forces consistency. Fragmented approaches and symbolic measures become visible, both internally and to external stakeholders. Combined with the CSDDD, this creates a governance mechanism that drives learning and efficiency.

Complex supply chains are a lever, not just a burden. Companies with international, multi-tier supplier networks stand to benefit most, precisely the organisations that currently face the greatest implementation challenge. Transparency, standardized expectations, and clear accountability pay off operationally in these environments.

Shifting the Question

Too much of the CSDDD and CSRD debate has focused on whether companies can afford to comply. The Loi de Vigilance evidence reframes that debate: the right question is not whether regulation incurs costs, but whether companies use regulation strategically.

Companies that treat due diligence as a compliance exercise — minimum effort, maximum tick-boxes — bear the costs without capturing the gains. Companies that embed it into how they manage suppliers, assess risk, and make procurement decisions are building operational resilience and long-term efficiency.

What You Can Do Now

If you are building or scaling a CSDDD or CSRD programme, the French experience offers a practical lens:

Invest in integration, not just documentation. Programs that connect due diligence to procurement decisions deliver operational returns; those that live in reports do not.

Plan for the short-term cost curve. Initial investment is real and predictable – building that into program planning avoids surprises.

Use the CSRD’s transparency requirement as a management discipline. The act of making processes verifiable surfaces gaps and drives improvement.

EcoVadis helps companies turn supply chain due diligence into operational intelligence – connecting sustainability data to procurement decisions across global value chains.