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On 9 December 2025, the European Parliament and the Council of the EU reached a provisional agreement on the substantive amendments to the EU Corporate Sustainability Reporting Directive ("CSRD") and the EU Corporate Sustainability Due Diligence Directive ("CS3D"), initially proposed by the European Commission as part of the Omnibus I simplification package on 26 February 2025. We summarise some of the key amendments under the provisional agreement in this update.
Amendments to the CSRD
The provisional agreement will amend the scope of the CSRD as follows:
- EU undertakings: from companies that have (a) 250 employees, (b) EUR 50m net turnover, and/or (c) EUR 25m balance sheet total, to companies that have over (a) 1,000 employees and (b) a net turnover exceeding EUR 450m.
- Non-EU undertakings: from companies that have (a) an annual net turnover in the EU exceeding EUR 150m for each of the last two consecutive financial years, and (b) a qualifying EU subsidiary or a branch in the EU that generated an annual net turnover in excess of EUR 40m in the preceding financial year, to companies that have (a) an annual net turnover in the EU exceeding EUR 450m for each of the last two consecutive financial years, and (b) a qualifying EU subsidiary or a branch in the EU that generated an annual net turnover in excess of EUR 50m in the preceding financial year.
- Exemptions: removal of listed small and medium-sized enterprises (SMEs) and financial holding undertakings.
- Review clause: insertion of a review clause allowing for the possible extension of the scope of the CSRD.
Amendments to the CS3D
The provisional agreement will amend the scope of the CS3D from companies (a) with more than 1,000 employees on average and (b) a net worldwide turnover of over EUR 450m in the last financial year to companies with over (a) 5,000 employees on average and (b) a net worldwide turnover of over EUR 1.5billion. The provisional agreement also inserts a review clause allowing for the possible extension of the scope of the CS3D.
In terms of the content of the due diligence required under CS3D, the regulatory burden has been slightly alleviated. For instance:
- Risk assessment: companies are now allowed to focus on the areas of their supply chains where actual and potential adverse impacts are most likely to occur, and to prioritise assessing adverse impacts which involve direct business partners.
- Value chain information: companies are not required to conduct a detailed mapping exercise, and instead can conduct a more general scoping exercise.
- Transition plans: the obligation for companies to adopt a climate transition plan aligned with the goals of the Paris Agreement has been removed.
A review clause on the need for an EU harmonised liability regime has also been inserted. The provisional agreement inserts a penalty cap of 3% of the company's net worldwide turnover.
The transposition deadline for CS3D will be postponed until 26 July 2028, with the new requirements becoming applicable in July 2029.
Next steps
The provisional agreement will now have to be formally endorsed by the Council of the EU and the European Parliament before it is published in the Official Journal of the European Union ("OJEU"). Normally, there are no further substantive changes to agreed text at this stage. However, on occasion, particularly in relation to politically contentious matters, amendments have been made after this stage. Therefore, it is possible that the agreed text may still change before it is published in the OJEU.
The provisional agreement on the substantive CSRD and CS3D amendments follows the adoption of the Stop-the-Clock Directive in April 2025, which postponed the application of the CSRD and CS3D (see our earlier article for more information on the Stop-the-Clock Directive and our 'State of play' publication for more information on the changes to the EU sustainability reporting landscape).
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