The European sustainability regulation is undergoing a critical transformation through the Omnibus Sustainability Reform Package. With the official adoption of the amfinishments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) by the European Parliament on 16 December 2025, the trilogue neobtainediations have been concluded and the Council’s approval is considered a formality. Following the publication of the amfinished directives in the Official Journal of the EU, member states are obliged to transpose them into national law within twelve months, by 26 July 2028, with corporate obligations taking effect from 26 July 2029.
Implementation in Germany
In Germany, the implementation has already been legislatively prepared, whereby adjustments to the draft implementation have become necessary as a result of the Omnibus Reform Package.
Germany had intfinished to integrate the CSRD into the German Commercial Code (Handelsgesetzbuch, HGB), specifically in Sections 289b et seqq. and 315b et seqq. HGB. Amfinishments are now required concerning the prepared thresholds, audit obligations, regulatory fine procedures, penalty provisions, and the temporal phasing, as well as a clarification of the group exemption. Although the commercial law size classification under Section 267 HGB remains in force, it loses its previous indicative effect as a reference point for sustainability reporting due to the thresholds now determined by EU law. At the same time, in order to avoid double reporting, clarification is required as to how the new thresholds will apply in practice. This particularly concerns the scope of the group privilege, the prevention of double reporting and third-countest parent company consnotifyations, as well as the question of the extent to which German subsidiaries below the threshold are exempt from reporting requirements if the parent company itself is subject to reporting requirements. Simultaneously, the reduction in the number of companies directly subject to reporting requirements will ease the burden on supervisory and auditing structures.
The Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) currently covers significantly more companies than the CSDDD. Consequently, the German legislator will have to decide between raising the thresholds or maintaining the stricter national rules, insofar as this is permissible under EU law, in light of the EU harmonizing effect of the CSDDD. An alignment of the direct public law obligations would rerelocate them for numerous companies previously covered by the LkSG, although considerable pressure would remain through contractual supply chain requirements of larger companies and via financing and investor-driven ESG requirements.
Since only minimum requirements were introduced regarding a liability regime, and no EU-autonomous tort law liability standard exists, the national legal framework remains decisive. Thus, liability is generally governed by tort law in accordance with Sections 823 et seqq. of the German Civil Code (Bürgerliches Gesetzbuch, BGB) and by corporate law pursuant to Section 93 of the German Stock Corporation Act (Aktiengesetz, AktG); in addition, violations of protective laws may also be considered.
It should be emphasized that the reform merely reduces the circle of those formally obligated but does not affect corporate responsibility. In concrete terms, this means that ESG-related duties remain part of the legal obligation (Section 93 AktG), sustainability compliance continues to form part of the risk management system (Section 91 (2) AktG), and the supervisory board continues to bear the monitoring obligation (Section 111 AktG). Similarly, the CSRD-specific disclosure obligations as well as the capital market and taxonomy-related requirements remain unaffected, thereby ensuring that the economic relevance of sustainability-related information for large German companies continues.
Until a structural reorganization in the context of an amfinishment to the LkSG occurs, the Federal Financial Supervisory Authority (BaFin) remains responsible for CSRD sustainability reporting by capital market-oriented companies. For large, non-capital market-oriented companies, the Federal Office of Justice can impose sanctions for violations, while the auditor oversight body (APAS) monitors the quality of the audit; to create the compliance visible to the public and authorities, the management of the company is thus to prepare a sustainability report, have it externally reviewed by an auditor and published it in the company register. The Federal Office for Economic Affairs and Export Control (BAFA) bear the responsibility for enforcing the CSDDD and LkSG supply chain due diligence obligations for both, capital market as well as non-capital market oriented companies. Overall, the reform therefore results in a reduction in the circle of addressees in Germany while maintaining sustainability-related governance and market requirements, rather than a comprehensive system modify.
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