EU Parliament Approves Major Scope Reductions for CSRD and CSDDD
The European Parliament has approved the first Omnibus simplification package, introducing significant revisions to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The Council’s final approval is expected shortly, after which the measures will take effect 20 days following publication in the EU Official Journal
These changes reduce administrative burdens, raise thresholds, and delay application timelines—substantially shrinking the number of companies required to report under CSRD and comply with CSDDD due diligence obligations.
CSRD Updates: Scope Reductions and Simplified Requirements
Earlier in the year, EU institutions agreed to delay CSRD obligations by two years under a “stop‑the‑clock” mechanism. A quick fix was also approved to defer certain ESRS (European Sustainability Reporting Standards) requirements for companies reporting in 2026
The approved simplification package introduces deeper structural changes.
CSRD Scope Reduction (Approx. 90%)
The new thresholds sharply reduce the number of companies in scope.
Updated CSRD Thresholds
| EU companies and groups | Non-EU parent companies | |
| Employee threshold | 1000+ | n.a. |
| Turnover threshold | 450 million € worldwide net turnover | Net EU-turnover of at least 450 million € for the last two years, and Has an EU entity generating >200 million € net turnover in the previous year |
| Timeline | Reporting from financial year starting 01 January 2027 | Reporting from financial year starting 01 January 2028 |
Additional CSRD Simplifications
Member states may waive reporting in 2025–2026 for companies now below the threshold.
Sector‑specific ESRS become voluntary.
Listed SMEs are no longer in scope.
Companies with fewer than 1,000 employees are not required to respond to information requests.
EFRAG has released draft simplified ESRS and voluntary SME reporting standards (VSME).
CSDDD Updates: Narrowed Scope and Reduced Due Diligence Obligations
The CSDDD implementation timeline is delayed by one year, to July 2029
CSDDD Scope Reduction (Approx. 70%)
Updated CSDDD Thresholds
| Group 1 EU companies | Group 2 Non-EU companies | Group 3 Franchisees and licensors | ||
| Employee threshold | 5000+ | n.a. | n.a. | n.a. |
| Turnover threshold | 1.5 billion € worldwide net turnover | 1.5 billion € worldwide net turnover | 275 million € net turnover and >75 million € in royalties | >75 million € in royalties |
Simplified CSDDD Requirements
Removal of the mandatory climate transition plan.
Elimination of the EU‑wide harmonized liability regime (member states now determine liability).
Penalties capped at 3% of worldwide turnover (previously 4%).
Supply‑chain due diligence requirements loosened:
No full supply‑chain mapping required.
No mandatory focus on direct suppliers.
Companies must identify the most likely or severe risk areas.
Companies no longer required to terminate business relationships as a last resort.
Due diligence effectiveness assessments reduced from annual to every five years.
Stakeholder management limited to relevant stakeholders only
What These Changes Mean for Companies
Even though far fewer companies fall directly under CSRD or CSDDD after the scope reductions, reporting and due diligence expectations remain high. Companies must still address:
Other EU due diligence regulations (e.g., EU Deforestation Regulation, Forced Labor Regulation)
Client, investor, and consumer expectations for transparency
To maintain long‑term resilience, companies should continue to:
Understand production locations and supply‑chain actors
Evaluate actual and potential impacts across human rights, labor, product safety, and environmental protection
Monitor risks associated with business decisions
QIMA provides expert sustainability, due diligence, and compliance services to help companies navigate CSRD, CSDDD, and broader ESG requirements. Contact us.
FAQs
Q1. When do the new CSRD reporting requirements take effect?
EU companies must begin reporting for financial years starting 1 January 2027. Non‑EU companies begin for financial years starting 1 January 2028.
Q2. How many companies are still in scope for CSRD after the changes?
The scope has been reduced by approximately 90%, driven by increased employee and turnover thresholds.
Q3. What is the new CSDDD compliance timeline?
The CSDDD transposition and application date has been delayed by one year, now applying from July 2029.
Q4. Are climate transition plans still required under CSDDD?
No. The requirement to adopt a climate transition plan has been removed.
Q5. Do companies still need to map their entire supply chain?
No. The updated CSDDD removes full supply‑chain mapping and focuses instead on the most likely or severe risks, consistent with a risk‑based approach.
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