The representatives of the EU Member States agreed on June 23 in Brussels to simplify the requirements for sustainability reporting and due diligence obligations. The aim of the proposal is to simplify the Corporate Sustainability Reporting Directive (CSRD) and Due Diligence Directive (CSDDD) by reducing reporting obligations and limiting the so-called "trickle-down effect" on smaller companies.
The proposal is part of the "Omnibus I" package that the Commission presented on February 26, 2025, to simplify EU legislation in the area of sustainability. Due to the far-reaching impact on the business world, this proposal was given priority treatment by the Council to provide legal certainty for EU companies regarding sustainability reporting and due diligence obligations.
Planned Changes to the CSRD (Corporate Sustainability Reporting Directive)
- The employee threshold is increased to 1,000 employees.
- Publicly listed SMEs are removed from the scope.
- Additionally, the Council introduces a revenue
- threshold of over 450 million euros to further limit the reporting obligation.
- A review clause is introduced, allowing for later expansion of the scope to ensure the availability of relevant sustainability information.
Planned Changes to the CSDDD (Corporate Sustainability Due Diligence Directive)
Scope of Application
- The employee threshold is raised to 5,000 employees,
- the revenue threshold is raised to 1.5 billion euros.
- The Council emphasizes that large companies have the greatest influence on their value chain and the capacities to implement due diligence obligations.
Identification and Assessment of Negative Impacts
- The Commission's proposals limit due diligence obligations to the company itself, subsidiaries, and direct business partners (Tier 1).
- The Council shifts to a risk-based approach, where companies only need to act where actual or potential harm is likely.
- No comprehensive mapping is required anymore – instead, a general risk analysis is conducted.
- Obligations remain limited
- to "Tier 1" partners, except in cases of demonstrably objective indications of risks with other partners.
- A review clause for possible expansion beyond Tier 1 is included.
Climate Protection
- The regulations for transition plans for climate change mitigation are harmonized with the CSRD.
- Obligation for implementation is replaced by a clarification that the transition plan describes specific measures (planned and implemented).
- Companies only need to adopt one transition plan for climate change mitigation.
- Supervisory authorities are given the authority to advise companies on the design of these plans.
- Obligation to adopt the transition plan is postponed by two years.
Civil Liability
- The Commission proposes to abolish the harmonized EU liability framework and forego the obligation for national liability rules to be mandatorily applied in cross-border cases.
- The Council supports this proposal and adopts it unchanged.
Implementation Deadline
- The implementation deadline for the CSDDD is postponed
- by one year to July 26, 2028.
The Council Presidency may enter negotiations with the European Parliament once it has decided on its own position, aiming to reach an agreement on this dossier.
Criticism of the plans was expressed by Heike Drillisch from the Supply Chain Initiative in a statement on June 24. She referred to the EU Council's position on the supply chain directive:
“According to the EU Council's ideas, more than 90 percent of the companies currently covered would be exempt from any legal responsibility in Germany in the future. Justifying this approach by euphemistically calling it a ‘simplification’ of the rules is simply cynical. It threatens a massive setback for responsible corporate governance and the protection of human rights and the environment in global supply chains.”
The alliance called upon the European Parliament to “take responsibility in the trilogue process and ensure
