EU: MEPs vote to roll back CSRD and CSDDD

Last week MEPs backed the drive to boost European competitiveness and reduce compliance burdens by agreeing compromises that will: reduce the scope of sustainability reporting scope; raise the CSDDD threshold to 5,000 employees; and maintain CSRD at 1,000 employee threshold

The Key Points: Centre-right and centre-left parties in the European Parliament have agreed on negotiating positions for the Commission's Omnibus I proposal that would significantly reduce sustainability reporting and due diligence obligations beyond the Commission's original proposals. The Corporate Sustainability Reporting Directive (CSRD) would maintain its 1,000 employee threshold but add a €450 million revenue requirement. 

The Corporate Sustainability Due Diligence Directive (CSDDD) threshold would increase dramatically to 5,000 employees with €1.5 billion revenue requirements, while shifting to a "risk-based approach" for due diligence. These changes would remove an estimated 80% of companies from CSRD scope and dramatically reduce CSDDD coverage.

Why This Matters: This represents a substantial retreat from the EU's original sustainability agenda in response to competitiveness concerns and compliance burden complaints. The changes would remove most smaller and medium-sized companies from detailed sustainability reporting requirements while focusing due diligence obligations on only the largest corporations. 

What Might Happen Next: The agreement requires committee approval followed by full Parliament voting before proceeding to trilogue negotiations between Parliament, Council, and Commission to finalize the legislation. The final agreement may differ from current proposals depending on these negotiations. Implementation will likely be phased to allow companies to adjust their compliance frameworks. The changes may influence other EU sustainability regulations as policymakers balance environmental goals with economic competitiveness.

What You Should Be Doing: Take note now that some big changes to CSRD and CSDDD are coming. Companies currently preparing for CSRD and CSDDD compliance should monitor the trilogue negotiations closely before finalizing their implementation strategies. Organizations near the threshold levels should evaluate whether the revised requirements will apply to them and adjust preparation accordingly.