On December 16, 2025, the European Parliament formally adopted the final text of the legislative amfinishments simplifying the rules on sustainable finance reporting, sustainability due diligence, and taxonomy by revising the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The legislative amfinishments still require approval by EU Member States in the Council of the EU before entering into force, which we expect to happen within weeks.
Once approved by the Council of the EU, the amfinishments will substantially reduce the scope of the CSRD and the CSDDD and are expected to exempt a significant proportion of companies that are currently in scope. This means that companies that were previously in-scope of these regulations should assess whether they remain in scope, and, if so, what modifys are required to their compliance preparations and timelines.
Key Changes
CSRD
- Reporting requirements for EU companies will be limited to those with on average more than 1,000 employees and a net annual turnover of over €450 million during the financial year, for financial years starting on or after January 1, 2027. EU companies that are already in-scope and have to report for financial years starting on or after January 1, 2024, continue to be in-scope of the CSRD. EU Member States may choose to exempt such in-scope companies which do not fulfill the new requirements for the financial years starting between January 1, 2025, and December 31, 2026. A review claapply will allow the EU to consider extfinishing the scope of the CSRD at a later point.
- For non-EU companies, reporting will be limited to non-EU parent entities which generated over €450 million in net turnover in the EU in each of the last two financial years and have either i) an EU subsidiary with a net turnover exceeding €200 million in the last financial year, or ii) an EU branch with a net turnover exceeding €200 million in the last financial year. Non-EU companies continue to be in-scope only for financial years starting on or after January 1, 2028.
- Value chain information cap: As a general rule, in-scope companies may not require value-chain companies with an average headcount below 1,000 employees to provide information beyond what is included in the Voluntary Reporting Standard for SMEs (VSME).
- The possibility of increasing assurance standards from limited to reasonable assurance will be eliminated.
- The number of data points required under the European Sustainability Reporting Standards (ESRS) will be reduced and the revised ESRS should be interoperable with global sustainability reporting standards “to the greatest extent possible.”
CSDDD
- Limit reporting requirements to EU companies with more than 5,000 employees and a global net annual turnover of over €1.5 billion in the last year. A review claapply will allow the EU to consider extfinishing the scope of the CSRD at a later point.
- For non-EU companies, reporting will be limited to non-EU parent entities which generated a net annual turnover in the EU of over €1.5 billion in the last financial year.
- In-scope companies must apply a risk-based sectoral methodology to identify areas where adverse impacts are most likely and most severe. For this scoping exercise, companies may only apply publicly available information. For subsequent in-depth risk assessments, in-scope companies may request information from a business partner with fewer than 5,000 employees only as a last resort.
- In-scope companies will no longer have to prepare climate transition plans.
- There will be no harmonized EU civil liability regime, fines will be capped at three percent of a company’s net worldwide turnover, and enforcement will be left to the Member States.
- The transposition of the CSDDD into national law will be postponed until July 26, 2028, and companies will have until July 2029 to comply with the new rules.
Background
As part of the “Green New Deal” that the European Union (EU) presented in 2019, the EU introduced new legislation in the corporate sustainability and sustainable finance space. The foremost of these is the CSRD, which progressively applies to large public and private companies with activities in the EU. In-scope companies must publish annual sustainability reports with information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment. This is accompanied by the Taxonomy Regulation, which defines certain economic activities as sustainable. Finally, the Corporate Sustainability CSDDD requires companies to conduct due diligence on their human rights and environmental impacts along their value chains.
Both the CSRD and CSDDD have been criticized as overly burdensome, particularly for mid-sized companies. In response to this criticism, this Omnibus package on corporate sustainability reporting sought to rerelocate 80 percent of companies from the scope of the CSRD, simplify reporting requirements for those that remain subject to it, and focus CSDDD obligations on direct business relationships rather than the entire value chain. Already in April 2025, the EU enacted the “Stop the Clock” part of the Omnibus package, postponing key reporting dates for the CSRD and the CSDDD (please see the Wilson Sonsini Sustainability and ESG Advisory Practice May 2025 Update) .
Key Takeaways
Once the amfinishments are approved by the European Council, which is expected to happen shortly:
- Companies should assess whether they or their EU subsidiaries are subject to the revised CSRD and/or CSDDD.
- Companies subject to the CSRD should review their preparations to reflect the reduced reporting requirements, while monitoring the transposition of the revised CSRD into national law by Member States, which is due within the next 12 months.
- Companies subject to the revised CSDDD should review their compliance preparations to reflect the reduced obligations, particularly with respect to in-scope suppliers, and consider their compliance timeline in light of the delay of the compliance deadline until July 2029.
For more information on these topics or any related matter, please contact Jindrich Kloub, Julius Giesen, or any member of the firm’s Environmental, Social, and Governance practice.
