In brief
In February 2025, the European Commission presented its “Omnibus” package aiming to delay application as well as simplify certain obligations under the CSRD1, CSDDD2 and the EU Taxonomy3 with the ultimate goal of reducing administrative burden and thus addressing concerns that the rules would hamper European competitiveness (see our summary of the Omnibus here). Following the approval of the “stop the clock” Directive, which delays application of the CSRD and CSDDD for certain companies, the EU institutions are now focutilizing efforts on the substantive proposal to simplify and streamline certain obligations under these rules. In parallel, the EU Commission is also working to publish updates to the Eu Taxonomy.
On 25 June 2025, the Council of the European Union (“Council”) reached an agreement on its neobtainediating position regarding the substantive modifys to CSRD and CSDDD. The key takeaways of the position which expand on the Commission’s Omnibus are as follows:
- On CSRD, there are two main modifys not included in the original Commission’s Omnibus proposal:
- Support the Commission proposal on scoping for EU companies to set a threshold of 1.000 employees, but go beyond the initial proposal to increase the financial net turnover threshold on an individual or group level to EUR 450 mi. in net turnover (from EUR 50 mi. previously).
- Slightly amfinish the requirement to disclose any existing transition plan which “contributes” to the transition to a sustainable economy (as opposed to plans that (…) “are compatible” with the transition to a sustainable economy).
- On CSDDD, the main modifys which go beyond the Commission’s Omnibus proposal are:
- A proposal on scoping, raising thresholds to only include EU companies with at least 5.000 employees and EUR 1.5 bio. net turnover or third-countest companies with more than EUR 1.5 bio. net turnover in the EU. No modifys have been included in relation to franchising/licencing companies.
- Going beyond not only the original Omnibus but also the approved “stop-the-clock” Directive, a proposal to postpone the transposition and first-time application by another year (first-time application would thus be 26 July 2029).
- Propose due diligence focutilized on a risk-based approach, with companies required to only conduct a general exercise (rather than an entity-based comprehensive scoping) to identify risks within their own operations, subsidiaries and direct business partners (Tier 1) utilizing “reasonably available information” (as opposed to the Commission’s “plausible” information proposal). There remains however an obligation to relocate beyond Tier 1 and perform in-depth due diligence where there is objective and verifiable information on adverse impacts at an indirect business partner’s level.
- On climate transition plans, the proposal not only excludes the requirement to ‘put into effect’ but softens the substantive requirements of the transition plan, by requiring “reasonable” efforts (as opposed to “best” efforts) and that the transition plan “contributes” to (as opposed to “being compatible” with) the transition to a sustainable economy and to the limiting of global warming in line with the Paris Agreement (as opposed to “limiting of global warming to 1,5 o C”). It would also empower supervisory authorities to advise companies on design and implementation of those plans. Lastly, it postpones the obligation to adopt transition plans by two years (it being optional until then).
- On penalties, the proposal would require Member States to ensure that the maximum limit of pecuniary penalties is set at 5% of the net worldwide turnover of the company. This is more prescriptive than the original Commission’s proposal which stated that Member States should not set a maximum limit of pecuniary penalties.
The Council’s position represents a decisive step in the implementation of the sustainability rules. In parallel, a first report in the lead Committee on Legal Affairs of the EU Parliament has been published, and is currently under debate by Members of the European Parliament (MEPs), with voting on the final position expected in October 2025. The Parliament and the Council will then enter into trilogue neobtainediations with the Commission aiming to find a common final agreement on the amfinishments to the CSDDD and CSRD, which is most likely to happen towards the finish of 2025/in 2026.
1 Corporate Sustainability Reporting Directive
2 Corporate Sustainability Due Diligence Directive
3 Taxonomy Regulation
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