The Glass Pipeline: Achieving Radical Transparency with AI and IoT in the CSDDD Era
The Corporate Sustainability Due Diligence Directive—sometimes cited with the acronyms CSDDD or CS3D—imposes legally binding obligations on large companies operating within the European Union to identify actual and potential environmental human rights risks linked to their supply and value chains. The metaphorical image of a glass pipeline highlights the high transparency required for success. How could artificial intelligence and the Internet of Things assist businesses obligated to follow this new law?
Uncovering Hidden Threats
AI and IoT improve visibility, which is particularly important for large enterprises. These entities often operate multiple sites in numerous countries. As sprawling supply chains expand, maintaining oversight becomes more challenging. Connected devices can give real-time alerts of issues for employees to investigate, helping them stay on top of matters before they get out of control.
In June 2025, the Council of the European Union provided additional clarity by setting thresholds for the CSDDD. It applies to businesses with a net turnover of €1.5 billion and 5,000 or more employees. Members believe these have the biggest value chain impacts and are best equipped to absorb the extra costs of due diligence processes.
The Council also stipulated that applicable organizations could perform general scoping exercises to determine where actual and potential adverse impacts will likely occur according to reasonably available information. AI and IoT work well for fulfilling this requirement because teams often set them up to run in the background, sometimes collecting data for weeks or months. Gathered information may illuminate how threats have increased or otherwise changed over time.
Increasing the Accessibility of Digital Tools
Parties familiar with the issue cite traceability as essential for enabling supply chain transparency and verifying the absence of deforestation. Some advocate for making digital public goods and infrastructure central to such efforts.
Digital public infrastructure encompasses frameworks or foundational improvements everyone can use to build value. In supply chains, it might include online identifiers for farms or farmers, payment systems that allow instant, traceable transactions, or secure data-sharing platforms and tools.
Conversely, from a supply chain perspective, digital public goods are freely available tool kits for problem-solving. They include resources such as datasets, monitoring software and AI models to analyze satellite images. Making them open and adaptable increases user-friendliness, including for entities unaccustomed to using AI and IoT.
Companies that follow the CSDDD could facilitate these two prongs to boost technology access, especially among smaller or less-resourced partners. Those parties might need specific support to comply with new expectations.
Reducing Unintended Consequences
Even decision-makers who make measurable progress in building highly functional, transparent supply chains may discover additional work to do. Many use AI to find and mitigate risks in global networks. These include and span beyond the CSDDD’s scope.
Geopolitical tensions, pandemics, and raw or finished goods shortages all trigger potential threats for logistics professionals to understand and minimize. Although some factors remain outside their influence, thorough knowledge of the issues raises proactiveness and preparedness in uncertain times.
As they assess how AI might fit into due diligence, leaders must understand the potential downsides that could counteract their efforts. Data centers and algorithm-training processes consume tremendous amounts of water and energy. Although researchers continually look for better options, these might take years to become mainstream or never manifest commercially.
Some AI applications create human rights issues, too. They require massive labor forces of millions of people worldwide who identify and tag images. These workers typically receive small amounts of money despite frequent exposure to trauma-inducing content.
They also often live in parts of the world with fewer employee protections than locations such as the United States and Europe, although those regions benefit from the results. The CSDDD may end this historical dark side of AI, requiring businesses to deploy the technology more responsibly.
Applying Technology to Uphold the CSDDD
Technology can assist brands in abiding by the CSDDD. Decision-makers using it to raise supply chain transparency should consider the above examples and look for ways to maximize mutual benefits while generating reliable data and actionable alerts.
