EU Simplifies Corporate Sustainability Reporting and Due Diligence Requirements

The Council presidency and European Parliament negotiators have reached a provisional agreement to significantly reduce the administrative burden of corporate sustainability obligations, marking a major shift in EU regulatory approach. The deal simplifies both the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) by narrowing their scope and reducing requirements for companies across the value chain.

Key Changes to CSRD

The reporting thresholds have been substantially increased. Companies will now fall under CSRD scope only if they exceed 1,000 employees and €450 million net turnover. Listed SMEs are completely removed from the directive’s scope. Financial holding undertakings receive a full exemption, and critically, companies that began reporting in 2024 (wave one) will be exempt for 2025 and 2026 if they no longer meet the revised thresholds. The agreement also introduces a review clause for potential future scope adjustments.

CS3D Scope Narrowed

For due diligence obligations, the thresholds have been raised to 5,000 employees and €1.5 billion net turnover, targeting only the largest companies with the greatest value chain influence. The provisional agreement removes the requirement for comprehensive mapping exercises, replacing them with more general scoping based on reasonably available information. Companies can now prioritize assessment of adverse impacts involving direct business partners when multiple areas present equally likely or severe risks. The obligation to adopt climate transition plans has been completely removed.

Liability and Enforcement Adjustments

The EU-harmonised liability regime has been eliminated, with Member states retaining control over liability rules. Penalties are now capped at a maximum of 3% of net worldwide turnover, with the Commission issuing implementation guidelines. The transposition deadline has been postponed to July 26, 2028, with companies required to comply by July 2029.

Implications for Supply Chain Data Management

These changes substantially reduce the number of companies directly subject to sustainability reporting and due diligence requirements. However, the value chain information obligations remain significant for those still in scope. The emphasis on "reasonably available information" and scoping exercises rather than comprehensive mapping requires robust yet flexible supply chain data collection systems.

For companies navigating these revised requirements, centralised data management becomes even more critical. The ability to efficiently identify which suppliers and products fall within the narrowed scope, collect targeted sustainability data, and maintain audit-ready documentation will determine compliance efficiency.

To understand how CDX can support your CSRD and CS3D preparation under the new simplified framework, contact us at cdx-info@cdx.com or request a demo.