Simplification of CSRD and CSDDD Under the EU Omnibus I Proposal
On 26 February 2025, the European Commission introduced a new legislative package proposal (Omnibus I) aimed at simplifying certain regulatory frameworks, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
As a first step, legislation proposing the postponement of these requirements was published in the EU Official Journal on 16 April 2025 and entered into force. Accordingly, the CSRD reporting obligations for large companies, originally set to apply in 2025, were postponed by two years. For the CSDDD, the implementation timeline was postponed by one year, setting the new date as 26 July 2028. Subsequently, on 9 December 2025, a provisional agreement was reached between the European Parliament and the Council of the EU on further simplification measures regarding the substance of the legislation.
Under this provisional agreement, significant changes were introduced. For CSRD, in order to further reduce the reporting burden, the scope was limited to large enterprises with more than 1,000 employees, and listed SMEs were excluded from the Directive’s scope. In addition, a net turnover threshold of more than 450 million euros was introduced. For non-EU companies, the net turnover threshold generated within the EU was also increased to 450 million euros.
Furthermore, for companies within the scope of CSRD, information requests directed at smaller companies in their value chain with fewer than 1,000 employees were restricted to the information defined in voluntary sustainability reporting standards. Small companies were granted the right to refuse additional information requests, thereby preventing the transfer of reporting obligations down the supply chain. A review clause was also included, allowing for potential future expansion of the scope.
With respect to the Corporate Sustainability Due Diligence Directive (CSDDD), only large EU companies with more than 5,000 employees and annual net turnover exceeding 1.5 billion euros will be required to conduct due diligence to mitigate adverse impacts on environmental, human, and social rights. These rules will also apply to non-EU companies if their EU-generated turnover exceeds the same threshold. Companies will be required to adopt a risk-based approach in their activity chains and avoid requesting unnecessary information from entities outside the scope.
The provisional agreement further extended the deadlines for transposition and implementation of the Directive. Member States will be required to transpose the Directive into national law by 26 July 2028, with the application date set for 26 July 2029. The obligation for companies within the scope to adopt a plan ensuring alignment of their business models and strategies with the Paris Agreement has been removed.
Regarding monitoring obligations under the CSDDD, companies will not be required to monitor their entire supply chains. Instead, consistent with a risk-based approach, monitoring will apply selectively across the value chain, focusing on situations where there is a clear risk of adverse impacts on human rights or the environment. Where multiple potential impacts are equally likely or severe, companies may prioritize impacts involving direct business partners. The obligation to conduct comprehensive mapping exercises has been removed, with a more general scoping exercise deemed sufficient, based on reasonably accessible information.
In cases of non-compliance, liability will continue to be enforced at the national level rather than at the EU level. Companies may face administrative fines of up to 3 percent of their global net turnover. The next step is the formal approval of the provisional agreement by the European Parliament and the Council, followed by publication in the EU Official Journal and entry into force.
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