The Council of the European Union and the European Parliament have reached a provisional agreement to simplify sustainability reporting and due diligence requirements to boost EU competitiveness. The agreement simplifies the directives on corporate sustainability reporting (CSRD) and corporate sustainability due diligence (CSDDD).
The provisional agreement on the CSRD raises the threshold to companies with over 1,000 employees and €450 million in net turnover, excluding listed SMEs and financial holding companies. It also grants a transition exemption for "wave one" firms that began reporting in 2024, pausing their obligations for 2025–2026. Additionally, the deal includes a review clause to consider future expansion of the CSRD and CSDDD scope.
The provisional agreement on the CSDDD raises the scope to companies with at least 5,000 employees and €1.5 billion in net turnover.
The provisional agreement broadens due diligence requirements beyond a company's own operations, subsidiaries, and direct partners. Firms can now focus on areas of their value chain with the highest risk of adverse impacts, prioritising direct partners when impacts are equally likely. Instead of a full mapping, companies will perform a general scoping exercise using reasonably available information.
The obligation for companies to adopt a transition plan for climate change mitigation has been removed.
The provisional agreement removes the EU-wide harmonised liability regime, leaving liability to national rules but adding a review clause for future reassessment. It sets a maximum penalty of 3% of a company's global turnover, with Commission guidelines to follow. The CSDDD transposition deadline is extended to 26 July 2028, and companies must comply by July 2029.
The provisional agreement must be now endorsed by the Council at the COREPER meeting (10 December) and the European Parliament at the JURI committee (11 December), before it is formally adopted by the two institutions.
