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Earlier today, the European Parliament (the Parliament) voted to adopt the provisional agreement reached last week on a proposal to amend the Corporate Sustainability Reporting (CSRD) and Corporate Sustainability Due Diligence (CSDDD) directives. The Council of the EU (the Council) is expected to do likewise in due course.
We have previously written about how the Council and Parliament positions compared to the European Commission’s (the Commission). Below is a summary of the key outcomes of negotiations between the co-legislators.
CSRD
Scope (EU): As the Commission envisaged, CSRD will apply to EU companies with more than 1,000 employees and an annual net turnover of more than €450m. Listed small and medium-sized entities will be excluded from scope but may voluntarily report using simplified standards (to be published by the Commission).
Scope (non-EU): Here, the change is more significant than that proposed by the Commission. CSRD will only apply to non-EU companies generating a net EU turnover of €450m (up from €150m) and with an EU subsidiary or branch generating more than €200m (up from €50m and €40m respectively).
“Transition exemption” for wave 1 companies: For companies that had to start reporting from their 2024 financial year but will be out of scope under the new thresholds, their reporting obligations will continue until the financial year starting on or after 1 January 2027. However, Member States will have the option of exempting such companies from reporting obligations for financial years beginning between 1 January 2025 and 31 December 2026. It remains to be seen whether Ireland will implement this option.
Value chain information sharing: Companies with fewer than 1,000 employees will have the right to refuse to share information beyond what is set out in the voluntary standards. Reporting entities will also be forgiven for certain gaps in their value chain data for the first three years of reporting.
Reporting standards: The Commission will adopt a delegated act to further simplify the first set of European Sustainability Reporting Standards (ESRS) and focus more on quantitative datapoints.
CSDDD
Scope (EU): Only large EU companies with more than 5,000 employees and a net turnover of more than €1.5bn will be in scope (up from 1,000 employees and turnover greater than €450m). Franchise and licensing thresholds will also be raised.
Scope (non-EU): The threshold for non-EU entities is also raised, from an EU turnover of €450m to €1.5bn.
Transposition postponed by two years: The deadline for transposition by Member States will be postponed by a further year to 26 July 2028. Companies will be required to comply with the new measures by 26 July 2029.
Climate transition plan: The requirement to produce a plan has been removed entirely (the Commission and the Council initially favoured retaining this provision but softening the language around the requirement).
Due diligence simplified: The due diligence process has been significantly pared back. Companies will be expected to “focus on the areas of their chains of activities where actual and potential adverse impacts are most likely to occur” and to prioritise adverse impacts involving their direct business partners. Furthermore, companies will no longer be required to carry out a comprehensive mapping exercise and may instead conduct “a more general scoping exercise … based on reasonably available information”.
EU civil liability regime removed: As the Commission intended, the planned EU-wide civil liability regime has been scrapped. Civil liability will now be governed by national regimes only.
Penalties capped at 3%: The sides agreed to lower the ceiling for penalties from 5% to 3% of a company’s net worldwide turnover.
The text includes a review clause providing for the possible future expansion of the financial thresholds for CSRD and CSDDD. The Commission’s first report is due by 30 April 2031.
Next steps
The Commission is now on track to achieve its ambition of finalising these amendments, introduced under Omnibus I, by the end of 2025. The Council is expected to adopt the text at the earliest opportunity in January 2026. It will then be signed into law and published in the Official Journal of the EU. Once it enters into force 20 days after publication, Member States will have 12 months to implement the changes relating to CSRD into their national legal regimes. The new deadline for the transposition of CSDDD will be 26 July 2028.
Thanks to Niamh Walshe for her assistance with this article. For further information in relation to these topics, please contact Anne O’Neill (author), Practice Development Lawyer, Jill Shaw, ESG & Sustainability Lead, Erin Ward, Solicitor, or any other member of the ESG & Sustainability Team.
Date published: 18 December 2025
