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EUROPEAN COMMISSION

Brussels, 26.2.2025

COM(2025) 80 final

2025/0044 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from

which Member States are to apply certain corporate sustainability reporting and due

diligence requirements

(Text with EEA relevance)

{SWD(2025) 80}

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

General context and objectives

In his report on ‘The Future of European Competitiveness’, Mario Draghi emphasised the

need for Europe to create a regulatory landscape which facilitates competitiveness and

resilience, drawing attention to burden and compliance costs created by the Corporate

Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence

Directive (CSDDD).1 In the Budapest Declaration on the New European Competitiveness

Deal, EU Heads of State and Government called for ‘a simplification revolution, ensuring a

clear, simple and smart regulatory framework for businesses and drastically reducing

administrative, regulatory and reporting burdens, in particular for SMEs’. 2 They called on the

Commission to make concrete proposals to reduce reporting requirements by at least 25% in

the first half of 2025.

In its Communication on the Competitive Compass for the EU, the Commission confirmed

that it would propose a first ‘Simplification Omnibus package’ which would include far-

reaching simplification in the fields of sustainable finance reporting, sustainability due

diligence and taxonomy.3 In its Communication entitled ‘A simpler and faster Europe:

Communication on implementation and simplification’, the Commission set out an

implementation and simplification agenda that delivers fast and visible improvements for

people and business on the ground, requiring more than an incremental approach and

underlining the need for bold action to streamline and simplify EU, national and regional

rules.4

The CSRD entered into force on 5 January 2023.5 It strengthened and modernised corporate

sustainability reporting requirements through modifications to the Accounting Directive, the

Transparency Directive, the Audit Directive and the Audit Regulation.6 The CSRD is an

important element of the European Green Deal and of the Sustainable Finance Action Plan.7 It

aims to ensure that investors have the information they need to understand and manage the

risks to which investee companies are exposed from climate change and other sustainability

issues. It also aims to ensure that investors and other stakeholders have the information they

1 “The future of European competitiveness”, September 2024. 2 Budapest Declaration on the New European Competitiveness Deal, 8 November 2024. 3 Communication from the Commission to the European Parliament, the European council, the Council,

the European Economic and Social Committee and the Committee of the Regions, COM (2025) 30 final: A

Competitiveness Compass for the EU. 4 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, COM (2025) 47 final: A simpler and faster

Europe: Communication on implementation and simplification. 5 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022

(Corporate Sustainability Reporting Directive). 6 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 (Accounting

Directive). Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004

(Transparency Directive). Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006

(Audit Directive). Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April

2014 (Audit Regulation). 7 Communication from the Commission, ‘The European Green Deal, COM(2019) 640 final.

Communication from the Commission ‘Action Plan: Financing Sustainable Growth’, COM/2018/097 final.

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need about the impacts of companies on people and the environment. It thereby contributes to

financial stability and environmental integrity. This is a necessary condition for financial

resources to flow to companies that pursue sustainability goals and creates more

accountability and transparency towards all stakeholders regarding companies’ sustainability

performance.

The CSDDD was adopted on 13 June 2024. Its objective is to contribute to the European

Union's broader ambition to transition towards a sustainable and climate-neutral economy as

outlined in the European Green Deal. It requires companies to identify and address adverse

human rights and environmental impacts in their own operations, those of their subsidiaries

and their chains of activities.

The CSRD and the CSDDD are now being implemented in a new and difficult context.

Russia’s war of aggression against Ukraine has driven up energy prices for EU undertakings.

Trade tensions are rising as the geopolitical landscape continues to shift. The different

approach undertaken by some other major jurisdictions regarding the regulation of corporate

sustainability reporting and due diligence raises questions about the effects of these laws on

the competitive positioning of EU companies. The ability of the Union to preserve and protect

its values depends amongst other things on the capacity of its economy to adapt and compete

in an unstable and sometimes hostile geopolitical context.

This proposal therefore postpones the entry into application of the CSDDD and of certain

provisions of the CSRD.

Specific context and objectives of this proposal regarding the CSRD

The CSRD currently applies to large undertakings, SMEs with securities listed on the EU

regulated markets, parent undertakings of large groups, as well as to issuers that belong to

these categories of undertakings. The entry into application of the reporting requirements

introduced by the CSRD is phased in according to different categories of undertakings. In the

first wave, large public interest entities with more than 500 employees must report for the first

time in 2025 for financial year 2024.8 In the second wave, the other large undertakings must

report in 2026 for financial year 2025.9 In the third wave, SMEs with securities listed in EU

regulated markets must report in 2027 for financial year 2026, although they have a

possibility to opt out of reporting for financial years 2026 and 2027.10 In the fourth wave,

certain non-EU undertakings that have business in the territory of the Union above certain

thresholds must report in 2029 for financial year 2028.11

8 As well as public-interest entities that are parent undertakings of a large group with more than 500

employees, for consolidated sustainability reporting. “Public-Interest Entities” are defined by Article 2 point (1)

of the Accounting Directive as undertakings that are: (a) governed by the law of a Member State and whose

transferable securities are admitted to trading on an EU regulated market; (b) credit institutions; (c) insurance

undertakings; or (d) designated by Member States as public-interest entities. “Large undertakings” are defined by

Article 3(4) of the Accounting Directive as undertakings which on their balance sheet dates exceed at least two

of the three following criteria: (a) balance sheet total: EUR 25 000 000; (b) net turnover: EUR 50 000 000; (c)

average number of employees during the financial year: 250. 9 As well as the other parent undertakings of large groups, for consolidated sustainability reporting. 10 Small and non-complex credit institutions, and captive insurance and reinsurance undertakings, are also

part of the third wave, although they may only use the additional two-year opt-out if they are listed SMEs. 11 According to article 40a of the Accounting Directive, as amended by the CSRD, an undertaking not

established in the EU must report sustainability information at the group level if it a) generates over EUR 150

million in the Union and b) has either a subsidiary in the EU that is subject to the sustainability reporting

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The CSRD requires undertakings in scope to report sustainability information according to

mandatory European Sustainability Reporting Standards (ESRS) and requires the Commission

to adopt such standards through delegated acts. In July 2023 the Commission adopted a first

set of ESRS which are sector-agnostic, meaning they are to be applied by all undertakings in

scope independently of the sector of the economy in which the undertaking operates.12 The

CSRD also requires the Commission to adopt sector-specific reporting standards, with a first

set of such standards to be adopted by June 2026. The CSRD allows listed SMEs to report

using a separate and lighter, proportionate set of standards instead of the full set of ESRS.

At the request of the Commission, EFRAG has submitted a sustainability reporting standard

for voluntary use by SMEs that are not in scope of the reporting requirements (VSME

standard).13 The objective of the VSME standard is to provide SMEs with a simple, widely

recognised tool through which they can provide sustainability information to banks, large

companies and other stakeholders that may demand such information.

Other important aspects of the CSRD are the provisions on assurance and on reporting value-

chain information. Undertakings must publish their sustainability information together with

the opinion of a statutory auditor or, if the Member States allows, an independent assurance

service provider. The current requirement is for limited assurance and the CSRD provides that

this could in the future become a requirement for reasonable assurance under certain

conditions.14 The CSRD also requires the Commission to adopt standards for sustainability

assurance by means of delegated acts.

The CSRD requires undertakings to report value-chain information to the extent necessary for

understanding their sustainability-related impacts, risks and opportunities. The CSRD

establishes a so-called value-chain cap, which states that ESRS may not contain reporting

requirements that would require undertakings to obtain from SMEs in their value chain

information that exceeds the information to be disclosed under the proportionate standard for

listed SMEs.

This proposal aims to reduce the reporting burden and to limit the trickle down of obligations

on smaller companies. Firstly, the separate legislative proposal made by the Commission in

parallel to this proposal would simplify the framework and reduce burden in the following

ways:

– The number of undertakings subject to mandatory sustainability reporting

requirements would be reduced by about 80%, taking out of scope large undertakings

with up to 1000 employees (i.e. some of the undertakings from the second wave and

some of the undertakings from the first wave) and listed SMEs (i.e. all undertakings

requirements introduced by the CSRD or has an EU branch that generates over EUR 40 million. In this case, the

legal obligation to publish the report falls on the EU subsidiary or branch. 12 Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive

2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards. 13 EFRAG was previously called the European Financial Reporting Advisory Group but its official name

is now just EFRAG. It is an independent private multistakeholder body, majority funded by the EU. 14 The amount of work for a limited assurance engagement is significantly less than for a reasonable

assurance engagement. The conclusion of a limited assurance engagement is usually provided in a negative form

of expression by stating that no matter has been identified by the assurance provider to conclude that the subject

matter is materially misstated. The conclusion of a reasonable assurance engagement is usually provided in a

positive form of expression and results in providing an opinion on the measurement of the subject matter against

previously defined criteria.

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in the third wave). The reporting requirements would only apply to large

undertakings with more than 1000 employees on average (i.e. undertakings that have

more than 1000 employees and either a turnover above EUR 50 million or a balance

sheet above EUR 25 million). This revised threshold would align the CSRD more

closely with the CSDDD.15

– For undertakings not subject to mandatory sustainability reporting requirements, the

Commission proposes a proportionate standard for voluntary use which would be

based on the VSME standard developed by EFRAG. According to this proposal, the

Commission would adopt this voluntary standard as a delegated act. In the meantime,

to address market demand, the Commission intends to issue a recommendation on

voluntary sustainability reporting as soon as possible, based on the VSME standard

developed by EFRAG.

– The value-chain cap would be extended and strengthened. It would apply directly to

the reporting company instead of being only a limit on what ESRS can specify. It

would protect all undertakings with up to 1000 employees rather than just SMEs as is

currently the case. And the limit would be defined by the voluntary standard adopted

by the Commission as a delegated act, based on the VSME standard developed by

EFRAG. This will substantially reduce the trickle-down effect.

– There would be no sector-specific reporting standards, so avoiding an increase in the

number of prescribed datapoints that undertakings should report.

– The possibility of moving from a requirement for limited assurance to a requirement

for reasonable assurance would be removed. This will provide clarity that there will

be no future increase in costs of assurance for undertakings in scope.

– Instead of an obligation for the Commission to adopt standards for sustainability

assurance by 2026, the Commission will issue targeted assurance guidelines by 2026.

This will allow the Commission to more quickly address emerging issues in the field

of sustainability assurance that may be generating unnecessary burden on

undertakings that are subject to the reporting requirements.

– The proposal introduces an “opt-in” regime where large undertakings with more than

1000 employees on average (i.e. undertakings that have more than 1000 employees

and either a turnover above EUR 50 million or a balance sheet above EUR 25

million) and a net turnover not exceeding EUR 450 million which claim that their

activities are aligned or partially aligned with the EU Taxonomy shall disclose their

turnover and CapEx KPIs and may choose to disclose their OpEx KPI. This “opt-in”

approach will eliminate entirely the cost of compliance with the Taxonomy reporting

rules for large undertakings with more than 1000 employees on average (i.e.

undertakings that have more than 1000 employees and either a turnover above EUR

50 million or a balance sheet above EUR 25 million) and a net turnover not

exceeding EUR 450 million which do not claim that their activities are associated

with economic activities that qualify as environmentally sustainable under the

Taxonomy Regulation. In addition, this proposal provides more flexibility by

15 In addition and for reasons of consistency, in Article 40a of the Accounting Directive, the net turnover

threshold for an undertaking not established in the EU to be subject to the reporting requirements at the group

level would be raised from EUR 150 million generated in the Union to EUR 450 million. Furthermore, for

reasons of consistency, the threshold for the EU branch under article 40a is raised from EUR 40 million to EUR

50 million and the threshold for the EU subsidiary is limited to large undertakings as defined in the Accounting

Directive. The key thresholds of the CSDDD are 1000 employees and EUR 450 million turnover.

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allowing these undertakings to report on activities that meet certain Taxonomy

technical screening criteria without meeting all of them. Such reporting on partial

alignment can foster a gradual environmental transition of activities overtime, in line

with the aim to scale up transition finance.

Secondly, the Commission intends to adopt without delay a delegated act to revise the first set

of ESRS. To deliver swiftly on the simplification and streamlining of the ESRS, and to

provide clarity and legal certainty to undertakings, the Commission aims to adopt the

necessary delegated act as soon as possible, and at the latest six months after the entry into

force of the Directive to simplify the reporting framework that is the subject of the separate

legislative proposal referred to above. The revision of the delegated act will substantially

reduce the number of mandatory ESRS datapoints by (i) removing those deemed least

important for general purpose sustainability reporting, (ii) prioritising quantitative datapoints

over narrative text and (iii) further distinguishing between mandatory and voluntary

datapoints, without undermining interoperability with global reporting standards and without

prejudice to the materiality assessment of each undertaking. The revision will clarify

provisions that are deemed unclear. It will improve consistency with other pieces of EU

legislation. It will provide clearer instructions on how to apply the materiality principle, to

ensure that undertakings only report material information and to reduce the risk that assurance

service providers inadvertently encourage undertakings to report information that is not

necessary or dedicate excessive resources to the materiality assessment process. It will

simplify the structure and presentation of the standards. It will further enhance the already

very high degree of interoperability with global sustainability reporting standards. It will also

make any other modifications that may be considered necessary considering the experience of

the first application of ESRS.

Thirdly, this proposal would postpone by two years the entry into application of the reporting

requirements for the second wave (large undertakings that are not public interest entities and

that have more than 500 employees, as well as large undertakings with fewer than 500

employees16) and the third wave (listed SMEs, small and non-complex credit institutions, and

captive insurance and reinsurance undertakings). The objective of the postponement is to

avoid a situation in which certain undertakings are required to report for financial year 2025

(second wave) or 2026 (third wave) and are then subsequently relieved of this requirement.

Such a situation would mean that the undertakings in question incur unnecessary and

avoidable costs.

The Commission invites co-legislators to reach rapid agreement on the proposed

postponement, in particular to provide the necessary legal clarity for undertakings in the

second wave that are currently required to report for the first time in 2026 for financial year

2025.

Specific context and objectives of this proposal regarding the CSDDD

According to the current rules, Member States should transpose the CSDDD by 26 July 2026.

Entry into application is envisaged in three phases: as from July 2027, the rules would start

applying only to the largest EU companies, i.e. those that have more than 5000 employees and

report a net annual (worldwide) turnover of more than 1.5 billion euro, as well as to non-EU

companies that generate more than EUR 1.5 billion net turnover in the EU. In the second

16 As well as undertakings that are not public-interest entities and that are parent of large groups with

more than 500 employees, and undertakings that are parents of large groups with fewer than 500 employees.

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wave, EU companies with more than 3000 employees and more than EUR 900 million net

turnover, as well as non-EU companies generating such net turnover in the EU would need to

comply with the new framework as from July 2028. Last, in July 2029, all other companies

falling under the general scope would have to start applying the (national rules transposing

the) Directive. As from this date, the CSDDD is estimated to apply to approximately 6000

large EU companies, and some 900 non-EU companies. The personal scope and phased-in

application take into account that companies of different size have different capacities to

implement the new mandatory framework and, as such, is a key element in ensuring a

proportional approach.

In addition, the separate legislative proposal made by the Commission in parallel with this

proposal would simplify the framework and reduce companies’ burden in a number of ways.

This proposal would postpone the first phase of the entry into application of the Directive by

one year. The objective of the postponement is to provide additional time for the first group of

companies to prepare for their obligations under the Directive, as amended, also taking into

account the guidelines that the Commission will have adopted in accordance with the tighter

timeline set out in the parallel simplification proposal.

Moreover, this proposal would postpone the transposition deadline for the Member States by

one year to account for possible delays in their ongoing CSDDD transposition efforts due to

possible amendments to the Directive by the parallel simplification proposal.

• Consistency with existing policy provisions in the policy area

Undertakings that are subject to the CSRD reporting requirements are also automatically

required to report certain indicators under article 8 of the Taxonomy Regulation. By

postponing the application of the reporting requirements for companies in the second and

third waves, this proposal would therefore also automatically postpone the date by when such

companies must report those indicators under the Taxonomy Regulation.

The reporting requirements set out in the CSRD and ESRS aim to ensure, amongst other

things, that financial market participants, credit institutions and benchmark administrators

have access to the sustainability information that they need from undertakings to meet their

own reporting obligations under the Sustainable Finance Disclosure Regulation, the Capital

Requirements Regulation and the Benchmarks Regulation. The proposed postponement will

delay improvements to availability of information for financial market participants, credit

institutions and benchmark administrators.

Undertakings subject to both the CSRD and the CSDDD are not required by the CSDDD to

report any information additional to what they are required to report under the CSRD. Since

this proposal postpones the measures foreseen in the CSDDD as well as the date of

application of the reporting requirements for certain undertakings under the CSRD, meaning

that the consistency between these two pieces of legislation is maintained.

• Consistency with other Union policies

This proposal is consistent with EU policy to enhance competitiveness, to simplify the

regulatory framework and to reduce burden on business while still achieving the policy goals

of the CSRD and CSDDD. This includes preserving the Green Deal as mid- to long-term

competitiveness depends on companies sufficiently integrating sustainability considerations

into their operations.

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2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal’s legal basis rests on Articles 50 and 114 of the Treaty on the Functioning of the

European Union (TFEU). Article 50 of the TFEU is the legal basis for adopting EU measures

aimed at attaining the right of establishment in the single market in company law, and it

mandates the European Parliament and the Council to act by means of Directives. Article 114

of the TFEU is a general legal basis with the objective of establishing or ensuring the

functioning of the single market – in this case, the free movement of capital. Articles 50 and

114 of the TFEU are the legal basis for Directive (EU) 2022/2464 and Directive (EU)

2024/1760.

• Subsidiarity (for non-exclusive competence)

This proposal modifies the dates of entry of application of certain provisions of EU law.

These dates can only be modified through action at EU level.

• Proportionality

The policy objective is to delay the dates of entry of application of certain provisions of EU

law. There only means of achieving that objective is to propose to modify those dates

• Choice of the instrument

This proposal is composed of a Directive that amends provisions of the Corporate

Sustainability Reporting Directive (CSRD) and of the Corporate Sustainability Due Diligence

Directive (CSDDD). An Omnibus Directive is considered to be the most appropriate legal

instrument to amend existing Directives as regards simplification and burden reduction in the

area of sustainability reporting and due diligence.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The CSDDD has not yet been transposed or applied by companies. The CSRD has been

applied by a first set of companies who are publishing their first sustainability statements

mainly in the first half of 2025. It has therefore not been possible to undertake an ex-post

evaluation or fitness check of either piece of legislation.

• Stakeholder consultations

The following consultation activities have helped to shape the content of this proposal.

- European Commission ‘Call for evidence on the rationalisation of reporting

requirements’, from October to December 2023.17

17 From 17 October to 1 December 2023, the Commission gathered feedback from 193 stakeholders on

possible rationalization measures for reporting requirements. The main contributors came from business

associations (84), companies (35), followed by public authorities (23) and non-governmental organisations (18).

In terms of geographical coverage, the stakeholders came mainly came from Germany (53), Belgium (47),

France (7), Lithuania (8), the Netherlands (6), Italy (5), and Austria (4). Feedback included also the call for the

use of digitalisation and smoother data flows, the re-use of data and standards, availability of clear and

timely guidance and to remove overlaps and inconsistencies in the

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- European Commission ‘Reality Check on Sustainability Reporting and Roundtable on

Simplification’ in early February 2025.

- The European Commission has also held separate stakeholder activities including two

large hybrid stakeholder forums on the CSRD in May and November 2024 with the

participation of more than 400 people in person and more than 3000 people virtually.

- The European Commission received a very significant number of letters and detailed

analyses from all types of stakeholders (from companies to investors, banks, civil

society, Non-Governmental Organisations, chambers of commerce and Member

States’ national administrations).

Corporate Sustainability Reporting Directive

The European Commission’s Call for Evidence on the Rationalisation of Reporting

Requirements sought evidence and views regarding regulations which are perceived to

produce administrative burden. Almost 200 stakeholders responded, and primarily called for a

simplification of sustainability reporting, due diligence and the EU Taxonomy.

In the European Commission’s meetings with European industry, social partners and civil

society in early February 2025, stakeholders expressed support for the overarching objectives

of the CSRD and CSDDD but highlighted a need for simplification and harmonisation in their

implementation.

Some stakeholders, particularly business and industry groups, suggested pausing the

application of existing legislation to focus on simplification. They argued that a postponement

of the reporting requirements of the CSRD would give the Commission the opportunity to

simplify the framework while allowing companies more time to prepare for any impending

changes.

Other stakeholders, particularly civil society groups, saw strong merits in maintaining the

rules and argued for the importance of legal certainty and regulatory stability for companies,

as well as for maintaining the objectives of the European Green Deal and the Sustainable

Finance Action Plan. They also highlighted that implementation guidelines should be used to

clarify and simplify certain parts of the sustainability reporting framework, instead of a

postponement or change to the existing rules.

The need for simplification has also been echoed by many other reports, recommendations,

and stakeholder views from both financial and non-financial sector undertakings, many of

which underscore the importance of reducing complexity and administrative burdens and

which have informed the burden reduction measures described in this proposal.

Corporate Sustainability Due Diligence Directive

Consultations with various stakeholders, including businesses, trade associations, and civil

society organizations, as well as other contacts with and inputs received from stakeholders

have informed the proposal. This includes, in particular, a two days-stakeholder event that

allowed the Commission to hear from practitioners about which challenges they see with the

current legislative framework and what could be possible solutions to address them. While

some stakeholders called for far-reaching changes and postponements, others emphasized the

legislation. https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13990-Administrative-

burden-rationalisation-of-reporting-requirements_en

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need for regulatory certainty and opposed reopening the Directive, instead focusing on

implementation. The proposal, together with the parallel proposal on simplification, aims to

balance these perspectives by maintaining the integrity of the CSDDD while introducing

changes to simplify and streamline the Directive.

• Collection and use of expertise

Not applicable.

• Impact assessment

This proposal is accompanied by a Commission Staff Working Document that includes an

analysis of the impacts of the proposed measures. Given the urgent need to put forward

proposals to address the identified problems, it has not been possible to prepare a full impact

assessment.

• Regulatory fitness and simplification

This proposal is expressly designed to facilitate a major simplification of the sustainability

reporting regime.

• Fundamental rights

Corporate Sustainability Reporting Directive

The proposal respects the fundamental rights enshrined, and adheres to the principles stated,

in the Charter of Fundamental Rights of the European Union. The Corporate Sustainability

Reporting Directive has an indirect positive impact on fundamental rights, given that

sustainability reporting requirements can influence corporate behaviour for the better. It

serves to make companies more aware of fundamental rights and positively influence how

they identify and manage actual and potential adverse impacts on fundamental rights. The

proposed postponement would also delay these positive impacts with regard to companies that

would start applying the reporting requirements at a later date. However the reduction of

burden on such companies, and especially the reduction of burden on companies that would

be taken out of the CSRD scope by the separate proposal made by the Commission in parallel

to this proposal, should lead to other societal gains in terms of wealth creation, employment

and innovation, including innovation for sustainability.

Corporate Sustainability Due Diligence Directive

The proposal respects the fundamental rights enshrined, and adheres to the principles stated,

in the Charter of Fundamental Rights of the European Union. The CSDDD has protection and

promotion of fundamental rights as one of its main objectives. It requires very large

companies to identify and address adverse human rights and environmental impacts in their

own operations, those of their subsidiaries and their chains of activities. The proposed

postponement would delay these positive impacts with regard to the first group of companies

in the scope of the Directive that would start applying the due diligence requirements at a later

date.

4. BUDGETARY IMPLICATIONS

The proposal does not have any budgetary implications.

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5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

Not applicable.

• Explanatory documents (for directives)

No explanatory documents are considered necessary.

• Detailed explanation of the specific provisions of the proposal

Article 1 amends Article 5(2) of Directive (EU) 2022/2464 (Corporate Sustainability

Reporting Directive “CSRD”) by introducing a 2-year postponement of the sustainability

reporting requirements for all companies in the CSRD scope that are required to comply from

financial year 2025 or 2026 depending on their size.

In particular:

– Paragraph (1) point (a) requires Member States to ensure that the following

undertakings report on sustainability from financial years starting on or after 1

January 2027 (instead of 1 January 2025):

• large undertakings with not more than 500 employees on average during the

financial year;

• large undertakings with more than 500 employees on average during the

financial year but that are not public-interest entities;

• parent undertakings of a large group with more than 500 employees on average

on its balance sheet dates, on a consolidated basis, during the financial year;

• parent undertakings of a large group with more than 500 employees on average

on its balance sheet dates, on a consolidated basis, during the financial year, but

that are not public-interest entities;

– paragraph (1) point (b) requires Member States to ensure that SMEs with securities

admitted to trading on an EU regulated market, small and non-complex institutions

(provided they are large undertakings or listed SMEs) and EU captive (re)insurance

undertakings (provided they are large undertakings or listed SMEs) report on

sustainability from financial years starting on or after 1 January 2028 (instead of 1

January 2026);

– paragraph (2) point (a) requires Member States to ensure that the following issuers

report on sustainability from financial years starting on or after 1 January 2027

(instead of 1 January 2025):

• issuers that are large undertakings with not more than 500 employees on average

during the financial year;

• issuers that are parent undertakings of a large group with not more than 500

employees on average, on a consolidated basis, during the financial year;

– paragraph (2) point (b) requires Member States to ensure that issuers that are SMEs,

small and non-complex institutions (provided they are large undertakings or listed

SMEs) and EU captive (re)insurance undertakings (provided they are large

undertakings or listed SMEs) report on sustainability from financial years starting on

or after 1 January 2028 (instead of 1 January 2026).

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Article 2 amends Article 37 of Directive (EU) 2024/1760 (Corporate Due Diligence Directive

"CSDDD”) by postponing the transposition deadline as well as the application of the

Directive by 1 year for the first group of companies in the scope of the Directive.

Article 3 requires Member States to transpose Article 1 of this Directive by 31 December

2025 at the latest, and to communicate to the Commission the text of their transposing

measures.

Article 4 specifies that this Directive enters into force on the day following that of its

publication in the Official Journal of the European Union.

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2025/0044 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from

which Member States are to apply certain corporate sustainability reporting and due

diligence requirements

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Articles 50 and 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee18,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) In its Communication of 11 February 2025 entitled ‘A simpler and faster Europe:

Communication on implementation and simplification’19, the Commission set out a

vision for an implementation and simplification agenda that delivers fast and visible

improvements for people and business on the ground. That requires more than an

incremental approach and the Union is to take bold action to achieve that goal. The

Commission, the European Parliament, the Council, Member States’ authorities at all

levels and stakeholders need to work together to streamline and simplify Union,

national and regional rules and implement policies more effectively.

(2) In the context of the Commission’s commitment to reduce reporting burdens and

enhance competitiveness, it is necessary to introduce targeted amendments to

Directives (EU) 2022/246420 and (EU) 2024/176021 of the European Parliament and of

18 OJ C […], […], p. […]. 19 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions of 11 February 2025, ‘A simpler

and faster Europe: Communication on implementation and simplification’, COM(2025) 47 final. 20 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022

amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive

2013/34/EU, as regards corporate sustainability reporting (OJ L 322, 16.12.2022, p. 15,

ELI: http://data.europa.eu/eli/dir/2022/2464/oj). 21 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate

sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859

(OJ L, 2024/1760, 5.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1760/oj).

EN 2 EN

the Council, to achieve those objectives, whilst maintaining the policy objectives of

the Green Deal22 and the Sustainable Finance Action Plan23.

(3) Article 5(2) first subparagraph of Directive (EU) 2022/2464 specifies the dates from

which Member States are to apply the sustainability reporting requirements set out in

Directive 2013/34/EU of the European Parliament and of the Council24, with different

dates depending on the size of the undertaking concerned. Large undertakings that are

public-interest entities with more than 500 employees on average during the financial

year, and public-interest entities that are parent undertakings of a large group with

more than 500 employees on average, on its balance sheet dates, on a consolidated

basis, during the financial year, are to report in 2025 for financial years beginning on

or after 1 January 2024. The other large undertakings, and the other parent

undertakings of a large group, are to report in 2026 for financial years beginning on or

after 1 January 2025. Small and medium-sized undertakings - excluding micro-

undertakings -, small and non-complex institutions and captive (re)insurance

undertakings are to report in 2027 for financial years beginning on or after 1 January

2026. Considering the ongoing Commission’s initiatives aiming at simplifying certain

existing sustainability reporting obligations and to reduce the undertakings’ related

administrative burden, to provide for legal clarity, and to avoid that the undertakings

currently required to report for financial years beginning on or after 1 January 2025

and on or after 1 January 2026 incur unnecessary and avoidable costs, the

sustainability reporting requirements for those undertakings should be postponed by

two years respectively.

(4) Article 5(2), third subparagraph of Directive (EU) 2022/2464 specifies the dates from

which Member States are to apply the sustainability reporting requirements set out in

Directive 2004/109/EC of the European Parliament and of the Council25, with different

dates depending on the size of the issuer concerned. Issuers that are large undertakings

with more than 500 employees on average during the financial year, and issuers that

are parent undertakings of a large group with more than 500 employees on average, on

its balance sheet dates, on a consolidated basis, during the financial year, are to report

in 2025 for financial years beginning on or after 1 January 2024. The other issuers that

are large undertakings, and the other issuers that are parent undertakings of a large

group, are to report in 2026 for financial years beginning on or after 1 January 2025.

Issuers that are small and medium-sized undertakings - excluding micro-undertakings

-, small and non-complex institutions and captive (re)insurance undertakings are to

report in 2027 for financial years beginning on or after 1 January 2026. Considering

22 Communication from the Commission to the European Parliament, the European Council, the Council,

the European Economic and Social Committee and the Committee of the Regions of 11 December

2019, ‘The European Green Deal’, COM/2019/640 final. 23 Communication from the Commission to the European Parliament, the European Council, the Council, the

European Central Bank, the European Economic and Social Committee and the Committee of the Regions, ‘Action

Plan: Financing Sustainable Growth’, COM/2018/097 final. 24 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual

financial statements, consolidated financial statements and related reports of certain types of

undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and

repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19,

ELI: http://data.europa.eu/eli/dir/2013/34/oj). 25 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the

harmonisation of transparency requirements in relation to information about issuers whose securities are

admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004,

p. 38, ELI: http://data.europa.eu/eli/dir/2004/109/oj).

EN 3 EN

the ongoing Commission’s initiatives aiming at simplifying certain existing

sustainability reporting obligations and to reduce the undertakings’ related

administrative burden, to provide for legal clarity, and to avoid that the issuers

currently required to report for financial years beginning on or after 1 January 2025

and on or after 1 January 2026 incur unnecessary and avoidable costs, the

sustainability reporting requirements for those issuers should be postponed by two

years respectively.

(5) The date by which Member States are to apply Directive 2024/1760 should be

postponed by one year for the first group of companies in the scope of that Directive,

to give companies more time to prepare for the requirements of that Directive and to

provide them with the opportunity to take into account the guidelines to be issued by

the Commission on how they should fulfil their due diligence obligations in a practical

manner.

(6) Moreover, in light of the parallel legislative proposal aiming at simplifying the

sustainability framework and reduce burdens for companies, the deadline for the

Member States to transpose Directive 2024/1760 should be extended by one year to

account for possible delays in their ongoing transposition efforts due to possible

amendments to that Directive.

(7) Since the objectives of this Directive cannot be sufficiently achieved by the Member

States but can rather, by reason of the scale or effects of the action, be better achieved

at Union level, the Union may adopt measures, in accordance with the principle of

subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance

with the principle of proportionality as set out in that Article, this Directive does not

go beyond what is necessary to achieve those objectives.

(8) Directives (EU) 2022/2464 and (EU) 2024/1760 should therefore be amended

accordingly.

(9) For reasons of urgency and to provide legal certainty as soon as possible, this

Directive should enter into force on the day following that of its publication,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Amendments to Directive (EU) 2022/2464

In Directive (EU) 2022/2464, Article 5(2) is amended as follows:

(1) the first subparagraph is amended as follows:

(a) in point (b), the introductory wording is replaced by the following:

‘for financial years starting on or after 1 January 2027:’;

(b) in point (c), the introductory wording is replaced by the following:

‘for financial years starting on or after 1 January 2028:’;

(2) the third subparagraph is amended as follows:

(a) in point (b), the introductory wording is replaced by the following:

‘for financial years starting on or after 1 January 2027:’;

(b) in point (c), the introductory wording is replaced by the following:

EN 4 EN

‘for financial years starting on or after 1 January 2028:’.

Article 2

Amendments to Directive (EU) 2024/1760

In Article 37(1) of Directive (EU) 2024/1760, the first and second subparagraphs are replaced

by the following:

‘Member States shall adopt and publish, by 26 July 2027, the laws, regulations and

administrative provisions necessary to comply with this Directive. They shall forthwith

communicate the text of those measures to the Commission.

They shall apply those measures:

(a) from 26 July 2028 as regards companies referred to in Article 2(1), points (a) and (b),

which are formed in accordance with the legislation of the Member State and that

had more than 3 000 employees on average and generated a net worldwide turnover

of more than EUR 900 000 000 in the last financial year preceding 26 July 2028 for

which annual financial statements have been or should have been adopted, with the

exception of the measures necessary to comply with Article 16, which Member

States shall apply to those companies for financial years starting on or after 1 January

2029;

(b) from 26 July 2028 as regards companies referred to in Article 2(2), points (a) and (b),

which are formed in accordance with the legislation of a third country and that

generated a net turnover of more than EUR 900 000 000 in the Union, in the

financial year preceding the last financial year preceding 26 July 2028, with the

exception of the measures necessary to comply with Article 16, which Member

States shall apply to those companies for financial years starting on or after 1 January

2029;

(c) from 26 July 2029 as regards all other companies referred to in Article 2(1), points

(a) and (b), and Article 2(2), points (a) and (b), and companies referred to in

Article 2(1), point (c), and Article 2(2), point (c), with the exception of the measures

necessary to comply with Article 16, which Member States shall apply to those

companies for financial years starting on or after 1 January 2030.’.

Article 3

Transposition

1. Member States shall bring into force the laws, regulations and administrative

provisions necessary to comply with this Directive by 31 December 2025 at the

latest. They shall forthwith communicate to the Commission the text of those

provisions.

When Member States adopt those provisions, they shall contain a reference to this

Directive or be accompanied by such a reference on the occasion of their official

publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions

of national law which they adopt in the field covered by this Directive.

EN 5 EN

Article 4

Entry into force

This Directive shall enter into force on the day following that of its publication in the Official

Journal of the European Union.

Article 5

Addressees

This Directive is addressed to the Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

EN 6 EN

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3

1.1. Title of the proposal/initiative ...................................................................................... 3

1.2. Policy area(s) concerned .............................................................................................. 3

1.3. Objective(s) .................................................................................................................. 3

1.3.1. General objective(s) ..................................................................................................... 3

1.3.2. Specific objective(s) ..................................................................................................... 3

1.3.3. Expected result(s) and impact ...................................................................................... 3

1.3.4. Indicators of performance ............................................................................................ 3

1.4. The proposal/initiative relates to: ................................................................................. 4

1.5. Grounds for the proposal/initiative .............................................................................. 4

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative ............................................................ 4

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone. ................................................................................. 4

1.5.3. Lessons learned from similar experiences in the past .................................................. 4

2. MANAGEMENT MEASURES................................................................................... 8

2.1. Monitoring and reporting rules .................................................................................... 8

2.2. Management and control system(s) ............................................................................. 8

2.2.1. Justification of the budget implementation method(s), the funding implementation

mechanism(s), the payment modalities and the control strategy proposed .................. 8

2.2.2. Information concerning the risks identified and the internal control system(s) set up

to mitigate them............................................................................................................ 8

2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio between

the control costs and the value of the related funds managed), and assessment of the

expected levels of risk of error (at payment & at closure) ........................................... 8

2.3. Measures to prevent fraud and irregularities ................................................................ 9

4. DIGITAL DIMENSIONS .......................................................................................... 29

4.1. Requirements of digital relevance .............................................................................. 30

4.2. Data ............................................................................................................................ 30

4.3. Digital solutions ......................................................................................................... 31

4.4. Interoperability assessment ........................................................................................ 31

4.5. Measures to support digital implementation .............................................................. 32

EN 7 EN

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1. Title of the proposal/initiative

Proposal for a Directive of the European Parliament and of the Council amending

Directives (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate

sustainability reporting and due diligence requirements for undertakings.

1.2. Policy area(s) concerned

Capital Markets Union, Savings and Investment Union, European Green Deal,

Sustainable Finance Strategy, Company law and corporate governance

1.3. Objective(s)

1.3.1. General objective(s)

The general objectives pursued by this legislative proposal are to simplify and reduce

certain elements of Directive 2006/43/EC, Directive 2013/34EU, Directive (EU)

2022/2464 and Directive (EU) 2024/1760 in order to alleviate the reporting burden

on companies in scope of the requirements.

By reducing the administrative burden associated with reporting requirements and

compliance costs of sustainability reporting stemming from the above legislation,

this proposal intends to enhance the proportionality of the framework and the

competitiveness of European companies, while also maintaining the objectives of the

European Green Deal.

1.3.2. Specific objective(s)

The specific objectives of the proposed amendments to Directive (EU) 2022/2464

included in this proposal aim to achieve the following results:

– Postpone the sustainability reporting requirements on wave 2 and wave 3

companies by two years.

The specific objectives of the proposed amendments to Directive (EU) 2024/1760

included in this proposal aim to achieve the following results:

– Postpone the transposition deadline and the application of the sustainability due

diligence requirements for wave 1 companies by one year.

1.3.3. Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

The expected results and impact of the proposed amendments are to simplify

sustainability reporting requirements and as a result reduce the administrative burden

on companies in this regard, whilst maintaining the objectives of the European Green

Deal and the Sustainable Finance Action Plan. The proposed amendments are also

expected to result in significant cost savings for companies in scope when carrying

out sustainability reporting.

The amendments to Directive (EU) 2024/1760 included in this proposal are expected

to ease the compliance burden of companies as they will have more time to prepare

for compliance, adjust their policies, processes and procedures, also taking into

account the guidelines which the Commission will issue, allowing them to build on

best practices and reduce their reliance on legal counselling and advisory services.

EN 8 EN

1.3.4. Indicators of performance

Specify the indicators for monitoring progress and achievements.

The CSRD has been applied by a first set of companies who are publishing their first

sustainability statements mainly in the first half of 2025. It has therefore not been

possible to undertake an ex-post evaluation or fitness check of either piece of

legislation.

To monitor progress towards achieving the proposal’s specific objectives, the

Commission will explore the possibility of organising exchanges with stakeholders

in different formats as well as periodic surveys of users of sustainability information

and of undertakings that report such information, depending on the availability of

financial resources. Article 6 of the CSRD requires the Commission to present a

report on the implementation of the Directive by April 2029.

In this proposal, the Commission also commits to revising the first set of ESRS.

Under Directive 2013/34/EU, the Commission is required to review those

sustainability reporting standards, including the sustainability reporting standards for

small and medium-sized undertakings, every three years to take account of relevant

developments, including the development of international standards.

The implementation of the CSDDD as amended, and its effectiveness in reaching its

objectives, in particular in addressing adverse impacts, will also be subject to regular

evaluation according to Article 36 of that Directive.

A number of indicators will be used to monitor the progress of these proposals, such

as the effectiveness and timeliness of the actions proposed, the efficiency of

processes for collecting and processing data in accordance with the sustainability

reporting requirements, and the objective to limit administrative burden and avoid

unnecessary or duplicative reporting requirements.

1.4. The proposal/initiative relates to:

 a new action

 a new action following a pilot project / preparatory action26

 the extension of an existing action

 a merger or redirection of one or more actions towards another/a new action

1.5. Grounds for the proposal/initiative

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative

With this proposal, the Commission proposes a Directive amending Directives (EU)

2022/2464 and (EU) 2024/1760. Once the co-legislators will have reached an

agreement on the contents of the proposal, Member States will have a certain period

of time to transpose the amendments introduced by this Directive with respect to

postponing the date as from which certain groups of companies have to apply with

these Directives into their national law. Under this proposal, this transposition

deadline is set at 31 December 2025. This proposal also seeks to delay the

transposition deadline of the Directive (EU) 2024/1760 by one year. As a result,

26 As referred to in Article 58(2), point (a) or (b) of the Financial Regulation.

EN 9 EN

Member States would be required to transpose the CSDDD by 26 July 2027 at the

latest.

In a separate legislative proposal, the Commission proposes to amend a number of

provisions of Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU)

2024/1760. The Commission also proposes to revise Commission Delegated

Regulation (EU) 2023/2772 (European Sustainability Reporting Standards). The

Commission will adopt the revised ESRS delegated act in time for those

undertakings in the second wave that would be required to start reporting under the

CSRD in 2028 for financial year 2027 to apply the revised standards.

To monitor progress towards achieving the proposal’s specific objectives, the

Commission will explore the possibility of organising exchanges with stakeholders

in different formats as well as periodic surveys of users of sustainability information

and of undertakings that report such information, depending on the availability of

financial resources. Article 6 of the CSRD requires the Commission to present a

report on the implementation if the Directive by April 2029. The implementation of

the CSDDD as amended, and its effectiveness in reaching its objectives, in particular

in addressing adverse impacts, will also be subject to regular evaluation according to

Article 36 of that Directive. This proposal does not require an implementation plan.

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone.

The Accounting Directive, as amended by the CSRD, already regulates the

disclosure of sustainability information in the EU. Common rules on sustainability

reporting and its assurance ensure a level playing field for companies established in

the different Member States. Significant differences in requirements for

sustainability reporting and assurance between Member States would create

additional costs and complexity for companies operating across borders, which

would be detrimental to the single market. Member States acting alone are not able to

modify existing EU laws to reduce the burden on companies.

Similarly, the CSDDD already sets out a harmonised regulatory framework for

corporate sustainability due diligence, and also covers certain third-country

companies active in the EU market, ensuring level playing field in this policy area.

1.5.3. Lessons learned from similar experiences in the past

N/A

1.5.4. Compatibility with the multiannual financial framework and possible synergies with

other appropriate instruments

N/A

1.5.5. Assessment of the different available financing options, including scope for

redeployment

N/A

EN 1 EN

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1. Heading(s) of the multiannual financial framework and expenditure budget

line(s) affected

N/A

4. DIGITAL DIMENSIONS

4.1. Requirements of digital relevance

The reporting requirements introduced by Directive 2013/34/EU require companies to

collect and report data concerning their impacts, risks and opportunities as regards material

sustainability matters. This exercise entails significant data identification, collection,

processing, verification and publication. In order to collect the relevant data, undertakings

often use digital data collection and data sharing platforms. Additionally, in order to store

and process the data for the purposes of sustainability reporting companies also often utilise

digital data management tools.

Users of sustainability information increasingly expect such information to be accessible,

comparable and machine-readable in digital formats. Member States must require that

undertakings subject to the sustainability reporting requirements of Directive 2013/34/EU

make their management reports available on their websites, free of charge to the public.

Digitalisation creates opportunities to exploit information more efficiently and holds the

potential for significant cost savings for both users and undertakings. Digitalisation also

enables the centralisation at Union and Member State level of data in an open and

accessible format that facilitates reading and allows for the comparison of data. These

requirements also complement the creation of a European single access point (ESAP) for

public corporate information.

As regards specific requirements within the Directive which are of digital relevance, please

see below.

Directive 2013/34/EU requires undertakings subject to sustainability reporting to prepare

their management report in the electronic reporting format specified in Article 3 of

Commission Delegated Regulation (EU) 2019/815 (ESEF Delegated Regulation). It also

requires these undertakings to mark up their sustainability reporting, including the

disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with the

digital taxonomy to be adopted by the Commission by way of an amendment to the ESEF

Delegated Regulation.

A digital taxonomy for the Union sustainability reporting standards will allow sustainability

reporting to be tagged and to be machine-readable. Until the adoption of this digital

taxonomy, undertakings are not required to mark-up their sustainability statements.

Considering that the sustainability statement will become machine-readable only once it is

both included in an XHTML document and marked-up with a digital taxonomy, pending

the adoption of the digital taxonomy undertakings are also

not required to prepare the management report in XHTML.

Stakeholders affected by these requirements include undertakings required to prepare and

publish a sustainability statement which has been digitally tagged and provided in an

XHTML format, as well as assurance providers who must verify that the sustainability

statement meets the necessary requirements.

EN 2 EN

The current proposal does not modify the existing digital tagging or format rules introduced

by the Corporate Sustainability Reporting Directive, which will enhance digital reporting

and enable the use of artificial intelligence in utilising the information that undertakings

report.

As regards the CSDDD, digital tools and technologies could support and reduce the cost of

data gathering and assessment. This proposal does not amend the relevant provisions of the

CSDDD.

4.2. Data

See section above.

4.3. Digital solutions

4.4. Interoperability assessment

4.5. Measures to support digital implementation

See section above.

N/A

To facilitate the smooth implementation of the requirements of digital relevance identified

in Section 4.1., the Commission is involved in a number of initiatives.

Firstly, a digital taxonomy for the Union sustainability reporting standards will be

necessary to allow the reported information to be tagged in accordance with those

sustainability reporting standards. The Commission will adopt a digital taxonomy for the

tagging of sustainability information via a Delegated Act, after having received technical

advice from ESMA.

Secondly, in the framework of the 2025 Technical Support Instrument round, the

Commission intends to launch a flagship multi-country project entitled "Improving

Sustainability Reporting for Businesses." This initiative aims to enhance the capacity of

Member States to support companies, particularly SMEs, in implementing CSRD and EU

Taxonomy reporting requirements. The support under this initiative will take into account

the evolution of the reporting requirements, and it will also be relevant for non-listed SMEs

that are not subject to mandatory reporting but face growing demands for sustainability

information from their financial and value chain partners.

Thirdly, EFRAG has launched an SME forum in which they bring together relevant

stakeholders of the SME community to discuss the implementation of the sustainability

reporting requirements and how digital solutions and tools can be used to facilitate

sustainability reporting for SMEs.

As regards the CSDDD, in order to help companies fulfil their due diligence obligations

along their value chain, the Directive encourages the use of digital tools and technologies

and requires the Commission to issue guidelines with useful information and references to

appropriate resources. This proposal does not amend the relevant provisions.

EN EN

EUROPEAN COMMISSION

Brussels, 26.2.2025

COM(2025) 81 final

2025/0045 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as

regards certain corporate sustainability reporting and due diligence requirements

(Text with EEA relevance)

{SWD(2025) 80}

EN 1 EN

EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

General context and objectives

In his report on ‘The Future of European Competitiveness’, Mario Draghi emphasised the

need for Europe to create a regulatory landscape which facilitates competitiveness and

resilience, drawing attention to burden and compliance costs created by the Corporate

Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence

Directive (CSDDD).1 In the Budapest Declaration on the New European Competitiveness

Deal, EU Heads of State and Government called for ‘a simplification revolution, ensuring a

clear, simple and smart regulatory framework for businesses and drastically reducing

administrative, regulatory and reporting burdens, in particular for SMEs’.2 They called on the

Commission to make concrete proposals to reduce reporting requirements by at least 25 % in

the first half of 2025.

In its Communication on the Competitive Compass for the EU, the Commission confirmed

that it would propose a first ‘Simplification Omnibus package’ which would include far-

reaching simplification in the fields of sustainable finance reporting, sustainability due

diligence and taxonomy.3 In its Communication entitled ‘A simpler and faster Europe:

Communication on implementation and simplification’, the Commission set out an

implementation and simplification agenda that delivers fast and visible improvements for

people and business on the ground, requiring more than an incremental approach and

underlining the need for bold action to streamline and simplify EU, national and regional

rules.4

The CSRD entered into force on 5 January 2023.5 It strengthened and modernised corporate

sustainability reporting requirements through modifications to the Accounting Directive, the

Transparency Directive, the Audit Directive and the Audit Regulation.6 The CSRD is an

important element of the European Green Deal and of the Sustainable Finance Action Plan.7 It

aims to ensure that investors have the information they need to understand and manage the

risks to which investee companies are exposed from climate change and other sustainability

issues. It also aims to ensure that investors and other stakeholders have the information they

1 “The future of European competitiveness”, September 2024. 2 Budapest Declaration on the New European Competitiveness Deal, 8 November 2024. 3 Communication from the Commission to the European Parliament, the European council, the Council,

the European Economic and Social Committee and the Committee of the Regions, COM (2025) 30 final: A

Competitiveness Compass for the EU. 4 Communication from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions, COM (2025) 47 final: A simpler and faster

Europe: Communication on implementation and simplification. 5 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022

(Corporate Sustainability Reporting Directive). 6 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 (Accounting

Directive). Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004

(Transparency Directive). Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006

(Audit Directive). Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April

2014 (Audit Regulation). 7 Communication from the Commission, ‘The European Green Deal, COM(2019) 640 final.

Communication from the Commission ‘Action Plan: Financing Sustainable Growth’, COM/2018/097 final.

EN 2 EN

need about the impacts of companies on people and the environment. It thereby contributes to

financial stability and environmental integrity. This is a necessary condition for financial

resources to flow to companies that pursue sustainability goals and creates more

accountability and transparency towards all stakeholders regarding companies’ sustainability

performance.

The CSDDD entered into force on 25 July 20248. It aims to ensure that companies operating

in the EU single market contribute to attaining the European Union’s broader ambition to

transition towards a sustainable and climate-neutral economy putting in place adequate

governance and management systems and taking appropriate measures to identify and address

adverse human rights and environmental impacts in their own operations, as well as in the

operations of their subsidiaries and their global value chains. In addition, it aims to ensure that

companies adopt and put into effect a transition plan for climate change mitigation.

The CSRD and the CSDDD are now being implemented in a new and difficult context.

Russia’s war of aggression against Ukraine has driven up energy prices for EU undertakings.

Trade tensions are rising as the geopolitical landscape continues to shift. The different

approach undertaken by some other major jurisdictions regarding the regulation of corporate

sustainability reporting and due diligence raises questions about the effects of these laws on

the competitive positioning of EU companies. The ability of the Union to preserve and protect

its values depends amongst other things on the capacity of its economy to adapt and compete

in an unstable and sometimes hostile geopolitical context.

This proposal therefore contains provisions to simplify and streamline the regulatory

framework with a view to reduce the burden on undertakings resulting from the CSRD and

the CSDDD without undermining the policy objectives of either piece of legislation and to

ensure more cost-effective delivery of the overall ambition of the European Green Deal

related to the green and just transition.

The proposal includes several important simplifications and flexibilities, which may

encourage undertakings to voluntarily apply sustainability and taxonomy reporting at a bigger

scale. Companies with strong sustainability profiles could benefit from this as differentiator,

potentially gaining an edge in attracting investments into their businesses. Companies in

transition can benefit from voluntary reporting since these undertakings can decide how to

communicate their transition strategies without the pressure of mandatory disclosures, while

also attracting investments.

In parallel to this proposal, the Commission is submitting a separate legislative proposal to

postpone the entry into application of the CSDDD and of certain provisions of the CSRD.

Specific context and objectives of this proposal regarding the CSRD

The CSRD is currently scheduled to apply to large undertakings, SMEs with securities listed

on the EU regulated markets, parent undertakings of large groups, as well as to issuers that

belong to these categories of undertakings. The entry into application of the reporting

requirements introduced by the CSRD is phased in according to different categories of

undertakings. In the first wave, large public interest entities with more than 500 employees

8 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 (Corporate

Sustainability Due Diligence Directive).

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must report for the first time in 2025 for financial year 2024.9 In the second wave, other large

undertakings must report in 2026 for financial year 2025.10 In the third wave, SMEs with

securities listed in EU regulated markets must report in 2027 for financial year 2026, although

they have a possibility to opt out of reporting for financial years 2026 and 2027.11 In the

fourth wave, certain non-EU undertakings that have business in the territory of the Union

above certain thresholds must report in 2029 for financial year 2028.12

The CSRD requires undertakings in scope to report sustainability information according to

mandatory European Sustainability Reporting Standards (ESRS) and requires the Commission

to adopt such standards through delegated acts. In July 2023 the Commission adopted a first

set of ESRS which are sector-agnostic, meaning they are to be applied by all undertakings in

scope independently of the sector of the economy in which the undertaking operates.13 The

CSRD also requires the Commission to adopt sector-specific reporting standards, with a first

set of such standards to be adopted by June 2026. The CSRD allows listed SMEs to report

using a separate and lighter, proportionate set of standards instead of the full set of ESRS.

At the request of the Commission, EFRAG has submitted a sustainability reporting standard

for voluntary use by SMEs that are not in scope of the reporting requirements (VSME

standard).14 The objective of the VSME standard is to provide SMEs with a simple, widely

recognised tool through which they can provide sustainability information to banks, large

companies and other stakeholders that may demand such information.

Other important aspects of the CSRD are the provisions on assurance and on reporting value-

chain information. Undertakings must publish their sustainability information together with

the opinion of a statutory auditor or, if the Member States allows, an independent assurance

service provider. The current requirement is for limited assurance and the CSRD provides that

this could in the future become a requirement for reasonable assurance under certain

conditions.15 The CSRD also requires the Commission to adopt standards for sustainability

assurance by means of delegated acts.

9 As well as public-interest entities that are parent undertakings of a large group with more than 500

employees, for consolidated sustainability reporting. “Public-Interest Entities” are defined by Article 2 point (1)

of the Accounting Directive as undertakings that are: (a) governed by the law of a Member State and whose

transferable securities are admitted to trading on an EU regulated market; (b) credit institutions; (c) insurance

undertakings; or (d) designated by Member States as public-interest entities. “Large undertakings” are defined by

Article 3(4) of the Accounting Directive as undertakings which on their balance sheet dates exceed at least two

of the three following criteria: (a) balance sheet total: EUR 25 000 000; (b) net turnover: EUR 50 000 000; (c)

average number of employees during the financial year: 250. 10 As well as the other parent undertakings of large groups, for consolidated sustainability reporting. 11 Small and non-complex credit institutions, and captive insurance and reinsurance undertakings, are also

part of the third wave, although they may only use the additional two-year opt-out if they are listed SMEs. 12 According to article 40a of the Accounting Directive, as amended by the CSRD, an undertaking not

established in the EU must report sustainability information at the group level if it a) generates over EUR 150

million in the Union and b) has either a subsidiary in the EU that is subject to the sustainability reporting

requirements introduced by the CSRD or has an EU branch that generated over EUR 40 million. In this case, the

legal obligation to publish the report falls on the EU subsidiary or branch. 13 Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive

2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards. 14 EFRAG was previously called the European Financial Reporting Advisory Group but its official name

is now just EFRAG. It is an independent private multistakeholder body, majority funded by the EU. 15 The amount of work for a limited assurance engagement is significantly less than for a reasonable

assurance engagement. The conclusion of a limited assurance engagement is usually provided in a negative form

of expression by stating that no matter has been identified by the assurance provider to conclude that the subject

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The CSRD requires undertakings to report value-chain information to the extent necessary for

understanding their sustainability-related impacts, risks and opportunities. The CSRD

establishes a so-called value-chain cap, which states that ESRS may not contain reporting

requirements that would require undertakings to obtain from SMEs in their value chain

information that exceeds the information to be disclosed under the proportionate standard for

listed SMEs.

This proposal aims to reduce the reporting burden and to limit the trickle down of obligations

on smaller companies. Firstly, this current proposal aims to simplify the framework and

reduce burden in the following ways:

– The number of undertakings subject to mandatory sustainability reporting

requirements would be reduced by about 80%, taking out of scope large undertakings

with up to 1000 employees (i.e. some of the undertakings from the second wave and

some of the undertakings from the first wave) and listed SMEs (i.e. all undertakings

in the third wave). The reporting requirements would only apply to large

undertakings with more than 1000 employees (i.e. undertakings that have more than

1000 employees and either a turnover above EUR 50 million or a balance sheet

above EUR 25 million). This revised threshold would align the CSRD more closely

with the CSDDD.16

– For undertakings not subject to mandatory sustainability reporting requirements, the

Commission proposes a proportionate standard for voluntary use which would be

based on the VSME standard developed by EFRAG. According to this proposal, the

Commission would adopt this voluntary standard as a delegated act. In the meantime,

to address market demand, the Commission intends to issue a recommendation on

voluntary sustainability reporting as soon as possible, based on the VSME standard

developed by EFRAG.

– The value-chain cap would be extended and strengthened. It would apply directly to

the reporting company instead of being only a limit on what ESRS can specify. It

would protect all undertakings with up to 1000 employees rather than just SMEs as is

currently the case. And the limit would be defined by the voluntary standard adopted

by the Commission as a delegated act, based on the VSME standard developed by

EFRAG. This will substantially reduce the trickle-down effect.

– There would be no sector-specific reporting standards, so avoiding an increase in the

number of prescribed datapoints that undertakings should report.

– The possibility of moving from a requirement for limited assurance to a requirement

for reasonable assurance would be removed. This will provide clarity that there will

be no future increase in costs of assurance for undertakings in scope.

matter is materially misstated. The conclusion of a reasonable assurance engagement is usually provided in a

positive form of expression and results in providing an opinion on the measurement of the subject matter against

previously defined criteria. 16 In addition and for reasons of consistency, in Article 40a of the Accounting Directive, the net turnover

threshold for an undertaking not established in the EU to be subject to the reporting requirements at the group

level would be raised from EUR 150 million generated in the Union to EUR 450 million. Furthermore, for

reasons of consistency, the threshold for the EU branch under article 40a is raised from EUR 40 million to EUR

50 million and the threshold for the EU subsidiary is limited to large undertakings as defined in the Accounting

Directive. The key thresholds of the CSDDD are 1000 employees and EUR 450 million turnover.

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– Instead of an obligation for the Commission to adopt standards for sustainability

assurance by 2026, the Commission will issue targeted assurance guidelines by 2026.

This will allow the Commission to address emerging issues more quickly in the field

of sustainability assurance that may be generating unnecessary burden on

undertakings that are subject to the reporting requirements.

– The proposal introduces an “opt-in” regime where large undertakings with more than

1000 employees and with a net turnover not exceeding EUR 450 million which claim

that their activities are aligned or partially aligned with the EU Taxonomy shall

disclose their turnover and CapEx KPIs and may choose to disclose their OpEx KPI.

This “opt-in” approach will eliminate entirely the cost of compliance with the

Taxonomy reporting rules for large undertakings with more than 1000 employees

and with a net turnover not exceeding EUR 450 million which do not claim that their

activities are associated with economic activities that qualify as environmentally

sustainable under the Taxonomy Regulation. In addition, this proposal provides more

flexibility by allowing these undertakings to report on activities that meet certain

Taxonomy technical screening criteria without meeting all of them. Such reporting

on partial alignment can foster a gradual environmental transition of activities

overtime, in line with the aim to scale up transition finance.

Secondly, the Commission intends to adopt a delegated act to revise the first set of ESRS. To

deliver swiftly on the simplification and streamlining of the ESRS, and to provide clarity and

legal certainty to undertakings, the Commission aims to adopt the necessary delegated act as

soon as possible, and at the latest six months after the entry into force of this proposal. The

revision of the delegated act will substantially reduce the number of mandatory ESRS

datapoints by (i) removing those deemed least important for general purpose sustainability

reporting, (ii) prioritising quantitative datapoints over narrative text and (iii) further

distinguishing between mandatory and voluntary datapoints, without undermining

interoperability with global reporting standards and without prejudice to the materiality

assessment of each undertaking. The revision will clarify provisions that are deemed unclear.

It will improve consistency with other pieces of EU legislation. It will provide clearer

instructions on how to apply the materiality principle, to ensure that undertakings only report

material information and to reduce the risk that assurance service providers inadvertently

encourage undertakings to report information that is not necessary or dedicate excessive

resources to the materiality assessment process. It will simplify the structure and presentation

of the standards. It will further enhance the already very high degree of interoperability with

global sustainability reporting standards. It will also make any other modifications that may

be considered necessary considering the experience of the first application of ESRS.

Thirdly, the separate proposal made by the Commission in parallel to this proposal would

postpone by two years the entry into application of the reporting requirements for the second

wave (large undertakings that are not public interest entities and that have more than 500

employees, as well as large undertakings with up to 500 employees17) and the third wave

(listed SMEs, small and non-complex credit institutions, and captive insurance and

reinsurance undertakings). The objective of the postponement is to avoid a situation in which

certain undertakings are required to report for financial year 2025 (second wave) or 2026

(third wave) and are then subsequently relieved of this requirement. Such a situation would

mean that the undertakings in question incur unnecessary and avoidable costs.

17 As well as undertakings that are not public-interest entities and that are parent of large groups with more than

500 employees, and undertakings that are parents of large groups up to 500 employees.

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The Commission invites co-legislators to reach rapid agreement on that postponement, in

particular to provide the necessary legal clarity for undertakings in the second wave that are

currently required to report for the first time in 2026 for financial year 2025.

Specific context and objectives of this proposal regarding the CSDDD

According to the current rules, Member States should transpose the CSDD Directive by

26 July 2026. Entry into application is envisaged in three waves: as from July 2027, the rules

would start applying only to the largest EU companies, i.e. those that have more than 5000

employees and report a net annual (worldwide) turnover of more than 1.5 billion euro, as well

as to non-EU companies that generate more than EUR 1.5 billion net turnover in the EU. In

the second wave, EU companies with more than 3000 employees and more than EUR

900 million net turnover, as well as non-EU companies generating such net turnover in the

EU would need to comply with the new framework as from July 2028. Last, in July 2029, all

other companies falling under the general scope would have to start applying the (national

rules transposing the) Directive. As from this date, the CSDDD is estimated to apply to

approximately 6000 large EU companies, and some 900 non-EU companies. The personal

scope and phased-in application take into account that companies of different size have

different capacities to implement the new mandatory framework and, as such, is a key

element in ensuring a proportional approach.

As regards large companies, the Directive adopts a risk-based approach, allowing them to

prioritise addressing those impacts first which are most likely or most severe. Also, the

Directive requires the company to take “appropriate measures” that are reasonably available

to it, taking into account the circumstances of the specific case.

The Directive also enables cost sharing opportunities through joint industry initiatives and

multi-stakeholder initiatives.

As regards preventing the shifting of the compliance burden on SME business partners, the

Directive requires large companies under the scope to use responsible contractual clauses,

investments, support, and improved purchasing practices.

Despite all these elements, the Directive is perceived as imposing significant regulatory

burden, in particular, when value chains are very complex and extensive and therefore

business associations have called for further simplifications and burden reduction, including

regarding SMEs which may allegedly still experience unwanted trickle-down effects.

Furthermore, business associations have pointed to uncertainties linked to a possible increase

in liability risks.

While the CSDDD already incorporates a number of mechanisms to ensure proportionality

and to ensure that companies in scope obtain the reputational and resilience benefits of more

sustainable value-chain management, taking into account companies’ feedback, this proposal

aims to clarify and simplify the framework, and to reduce the burden of companies, including

one-off and recurring compliance costs, already in the short-term. In particular, the following

changes are introduced to this end:

– tailoring the obligations with respect to indirect business partners in the chain of

activities to cases of circumvention or when there is information pointing to likely or

actual adverse impacts,

– reducing the required frequency of the periodic monitoring exercises, and

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– clarifying and targeting the scope of stakeholder engagement.

The proposal also includes several other elements that aim to increase legal certainty and

create a level playing field in the EU, contributing to burden reduction and improved

international competitiveness.

In parallel with this proposal, the Commission has also adopted a proposal that would

postpone by one year the transposition deadline and remove the first wave for the entry into

application. By advancing the deadline set out in the Directive for adopting the general

guidelines by the Commission (Article 19(3)), the overall result is that in-scope companies

will have two years to prepare for the entry into application allowing them to take fully into

account the best practices provided in these guidelines.

• Consistency with existing policy provisions in the policy area

Corporate Sustainability Reporting Directive

By removing the distinction between listed and non-listed undertakings this proposal is

consistent with the goal of the Capital Markets Union to make EU regulated markets more

attractive as a source of financing.

The reporting requirements set out in the CSRD and ESRS aim to ensure, amongst other

things, that financial market participants, credit institutions and benchmark administrators

have access to the sustainability information that they need from undertakings to meet their

own reporting obligations under the Sustainable Finance Disclosure Regulation, the Capital

Requirements Regulation and the Benchmarks Regulation. Undertakings that would no longer

be subject to the CSRD reporting requirements according to this proposal may still provide

information to financial market participants, credit institutions and benchmark administrators

on a voluntary basis. Where appropriate they may do this using the voluntary reporting

standards that, according to this proposal, the Commission would adopt as delegated acts.

According to this proposal, to be in scope of the sustainability reporting requirements

undertakings must have more than 1000 employees. Since the 1000 employee threshold is one

of the main criteria used to define which undertakings are subject to the CSDDD, this

proposal promotes closer alignment between the CSRD and CSDDD.

Undertakings subject to both the CSRD and the CSDDD are not required by the CSDDD to

report any information additional to what they are required to report under the CSRD. The

proposed modifications will not take out of the CSRD scope any undertakings that are subject

to the CSDDD, meaning that this consistency between the two pieces of legislation is

maintained.

Consistency with other pieces of EU legislation will be enhanced through modifications to the

ESRS delegated act where modifications to ESRS are the most appropriate means of

achieving that goal.

Corporate Sustainability Due Diligence Directive

Under the CSRD/ESRS, reporting on adverse impacts is not limited to direct value chain

partners. Consistency with the CSRD is maintained as the proposed changes to CSDDD

limiting due diligence, in the first place, to direct value chain partners are complemented by

requirements for companies in scope to assess indirect business partners in case of plausible

information suggesting actual or potential impacts at their level. The CSRD complements the

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CSDDD regarding due diligence reporting and the scope of both legal acts is now proposed to

be aligned. The provision on climate transition plans will be better aligned to the language of

the CSRD, while continuing to complement CSRD with a clear obligation to adopt such a

plan.

• Consistency with other Union policies

This proposal is consistent with EU policy to enhance competitiveness, to simplify the

regulatory framework and to reduce burden on business while still achieving the policy goals

of the CSRD and CSDDD. This includes preserving the Green Deal as mid- to long-term

competitiveness depends on companies sufficiently integrating sustainability considerations

into their operations.

With regard to the CSDDD, the proposal would simplify and streamline the sustainability due

diligence requirements for in-scope companies, thereby reducing administrative burdens, in

line with the objectives set out in the Competitiveness Compass, namely the 25% and 35%

(for SMEs) burden reduction targets.

At the same time, by reducing impacts on business partners, many of which will be SMEs or

small mid-caps, the proposal also contributes to the objective of supporting SMEs and small

mid-caps and relieving them from unnecessary burdens that might negatively affect their

prosperity and growth. Extending the scope of provisions subject to maximum harmonisation

to cover the core due diligence duties also contributes to the objective of the Single Market by

avoiding fragmentation through different national rules (‘gold-plating’) and ensuring a level

playing field across the European Union. While removing the uniform rules on civil liability

reduces harmonisation, it ensures respect for existing, national liability regimes – with which

companies in scope are familiar - in line with the subsidiarity principle and ensures greater

legal certainty on liability risks under a new type of risk-based corporate obligations.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal’s legal basis rests on Articles 50 and 114 of the Treaty on the Functioning of the

European Union (TFEU). Article 50 of the TFEU is the legal basis for adopting EU measures

aimed at attaining the right of establishment in the single market in company law, and it

mandates the European Parliament and the Council to act by means of Directives. Article 50

of the TFEU is the legal basis for Directives 2006/43/EC and 2013/34/EU, as well as part of

the legal basis for Directive (EU) 2022/2464 and Directive (EU) 2024/1760. Article 114 of

the TFEU is a general legal basis with the objective of establishing or ensuring the

functioning of the single market – in this case, the free movement of capital and the freedom

of establishment. Article 114 of the TFEU is part of the legal basis for Directive (EU)

2022/2464 and Directive (EU) 2024/1760.

• Subsidiarity (for non-exclusive competence)

Corporate Sustainability Reporting Directive

The Accounting Directive, as amended by the CSRD, already regulates the disclosure of

sustainability information in the EU. Common rules on sustainability reporting and its

assurance ensure a level playing field for companies established in the different Member

States. Significant differences in requirements for sustainability reporting and assurance

between Member States would create additional costs and complexity for companies

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operating across borders, which would be detrimental to the single market. Member States

acting alone are not able to modify existing EU laws to reduce the burden on companies.

Corporate Sustainability Due Diligence Directive

The CSDDD ensures a level playing field across the European Union by harmonising the

rules on corporate sustainability due diligence against the background of diverging existing

due diligence legislation at Member State level. In this light, the objective of simplifying and

streamlining the due diligence requirements and related provisions on public and private

enforcement cannot be achieved by the Member States alone. Therefore, action at the EU

level is necessary.

• Proportionality

Corporate Sustainability Reporting Directive

This proposal sets out a simple and proportionate framework for sustainability reporting that

would treat undertakings according to their size:

– Large undertakings with more than 1000 employees (i.e. undertakings that have more

than 1000 employees and either a turnover above EUR 50 million or a balance sheet

above EUR 25 million)18: subject to mandatory reporting requirements and must

report against the full set of ESRS, which will itself be revised and simplified.

– Out-of-scope undertakings (undertakings with up to 1000 employees): not subject to

mandatory reporting requirements, may use the proportionate voluntary standard to

be adopted by the Commission as a delegated act, based on the VSME standard

developed by EFRAG and are protected by the value-chain cap from excessive

information requests from larger companies within scope.

This framework is a more proportionate means of achieving the policy objectives of the

CSRD.

Corporate Sustainability Due Diligence Directive

With the proposed amendments the CSDDD becomes more proportionate as the changes aim

to simplify and streamline sustainability due diligence obligations of companies without

undermining the objectives of the Directive and the EU’s sustainability framework. The

underlying policy objective of this proposal is precisely to further strengthen the

proportionality of the Directive with a view to increase its efficiency in achieving its goals,

reflecting on calls from some stakeholders who consider that the CSDDD as currently in

force, would have placed excessive burden on businesses. Targeting the obligations with

respect to indirect business partners in the value chain, reducing the required frequency of the

periodic monitoring exercises, as well as streamlining the definition of stakeholders and better

targeting engagement to relevant stakeholders and limiting the due diligence steps when

engagement is required are all examples for the proposed elements that are designed to make

the Directive more proportionate.

18 As well as parent undertakings of groups with more than 1000 employees on average on a consolidated

basis, for consolidated sustainability reporting.

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• Choice of the instrument

This proposal is composed of a Directive that amends provisions of the Audit Directive,

Accounting Directive, Corporate Sustainability Reporting Directive (CSRD) and Corporate

Sustainability Due Diligence Directive (CSDDD). These directives set out complementary

reporting and behavioural duties in the area of sustainability, and an Omnibus Directive is the

most appropriate legal instrument to amend such existing inter-linked Directives with the

common objective as regards simplification and burden reduction.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The CSDDD has not yet been transposed or applied by companies. The CSRD has been

applied by a first set of companies who are publishing their first sustainability statements

mainly in the first half of 2025. It has therefore not been possible to undertake an ex-post

evaluation or fitness check of either piece of legislation.

• Stakeholder consultations

The following consultation activities have helped to shape the content of this proposal.

– European Commission ‘Call for evidence on the rationalisation of reporting

requirements’, from October to December 2023.19

– European Commission meetings with companies and other stakeholders in early

February 2025.

– The European Commission has also held separate stakeholder activities including

two large hybrid stakeholder forums on the CSRD in May and November 2024 with

the participation of approximately 400 people in person and more than 3000 people

virtually.

– The European Commission received a very significant number of letters and detailed

analyses from all types of stakeholders (from companies to investors, banks, civil

society, Non-Governmental Organisations, chambers of commerce and Member

States’ national administrations).

Corporate Sustainability Reporting Directive

The European Commission’s Call for Evidence on the Rationalisation of Reporting

Requirements sought evidence and views regarding regulations which are perceived to

produce administrative burden. Almost 200 stakeholders responded, and primarily called for a

simplification of sustainability reporting, due diligence and the EU Taxonomy.

In the European Commission’s meetings with European industry, social partners and civil

society in early February 2025 – including, in particular, a two days-stakeholder event

(‘reality check’) that allowed the Commission to hear from practitioners – stakeholders

expressed support for the overarching objectives of the CSRD and CSDDD but highlighted a

need for simplification and harmonisation in their implementation. Many business

19 From 17 October to 1 December 2023, the Commission gathered feedback from 193 stakeholders on

possible rationalization measures for reporting requirements: https://ec.europa.eu/info/law/better-

regulation/have-your-say/initiatives/13990-Administrative-burden-rationalisation-of-reporting-requirements_en.

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representatives stated that some of the sustainability disclosure requirements in the ESRS are

overly complex and numerous, and called for a revision of the ESRS to reduce the number

and complexity of the disclosure requirements. They recommended to further consider

interoperability of European standards with international ones, as well as to limit value chain

reporting requirements.

Some stakeholders have argued for a reduction in scope of the CSRD to relieve listed SMEs

and smaller large companies from sustainability reporting requirements. Some advocated for

achieving simplification by means of keeping smaller large companies within the scope of the

CSRD but allowing them to apply proportionate reporting standards instead of applying the

first set of ESRS. SME stakeholders highlighted the need to address the trickle-down effect on

SMEs in the value chain from sustainability reporting requirements and pointed out that the

lighter reporting regime for them should not be undermined by more extensive information

requests along the supply chain or by financial institutions.

While some stakeholders suggested pausing the application of existing legislation to focus on

simplification, others saw strong merits in maintaining the rules and argued for the

importance of legal certainty and regulatory stability for companies, as well as for

maintaining the objectives of the European Green Deal and the Sustainable Finance Action

Plan. They also argued that implementation guidelines should be used to clarify and simplify

certain parts of the sustainability reporting framework, instead of an extensive change to the

existing rules. Representatives of civil society argued that progressive companies should not

be treated less favourably than others. They highlighted the demand for sustainability

information from financial markets and end-investors.

Many stakeholders noted that the assurance requirements are creating a situation of over-

compliance. In this context, certain stakeholders called for a postponement of the limited

assurance requirement or urged the Commission to quickly adopt guidelines for limited

assurance in order to clarify the requirements.

Many business and industry stakeholders called for either a further postponement of the

sector-specific sustainability reporting standards or requested that the requirement for sector-

specific standards be removed completely from the CSRD. Companies highlighted the need to

correctly implement and become accustomed to reporting under the first set of ESRS and

argued that introducing sector-specific disclosure standards on top of the first set of ESRS

would further complicate the sustainability reporting process.

Stakeholders also called for clear guidance as regards the double materiality assessment under

ESRS. Many called for increased consistency of requirements and harmonised definitions

across different pieces of legislation, such as CSRD, CSDDD, Taxonomy, SFDR, etc.

The need for simplification has also been echoed by many other reports, recommendations,

and stakeholder views from both financial and non-financial sector undertakings, many of

which underscore the importance of reducing complexity and administrative burdens and

which have informed the burden reduction measures described in this proposal.

Corporate Sustainability Due Diligence Directive

Consultations with various stakeholders, including businesses, trade associations, and civil

society organizations, as well as other contacts with and inputs received from stakeholders

have informed the proposal. This includes, in particular, a two days-stakeholder event (‘reality

check’) that allowed the Commission to hear from practitioners about which challenges they

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see with the current legislative framework and what could be possible solutions to address

them. While some stakeholders called for far-reaching changes and postponements, others

emphasized the need for regulatory certainty and opposed reopening the Directive, instead

focusing on implementation. This proposal aims to balance these perspectives by maintaining

the integrity of the CSDDD while introducing changes to simplify and streamline the

Directive.

• Collection and use of expertise

To prepare this proposal the Commission has taken account of analyses produced by

stakeholders and experts on the actual and future implementation of the Corporate

Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.

In addition, the proposal has been informed by input from relevant stakeholders, including

companies’ sustainability officers.

• Impact assessment

The issue of competitiveness is of critical urgency as it directly influences the European

Union's ability to achieve sustainable economic growth and maintain its position in the global

market. Competitiveness, tied closely to innovation, efficiency, and sustainability, is essential

for fostering economic resilience and ensuring that EU businesses can thrive in a rapidly

evolving global landscape. The current economic environment, characterized by rapid

technological advancements, shifting consumer demands, and increased global competition,

necessitates swift action to safeguard the EU's competitive edge. Given this urgency, the

proposal does not allow for an impact assessment.

However, it is important to note that this initiative involves amendments to existing legal acts,

which have already undergone comprehensive impact assessments. The insights and evidence

gathered from those previous assessments, together with input from stakeholders and

discussions with practitioners, have helped to shape the current proposal. For that reason, and

given the importance and urgency of this initiative, a derogation was granted under the

Commission’s Better Regulation Guidelines. Accordingly, no full-fledged impact assessment

has been prepared but the proposal is accompanied by a Commission Staff Working

Document that includes an analysis of the impacts of the proposed measures, including a

qualitative analysis and, where possible, estimations of costs savings as well as supporting

evidence.

• Regulatory fitness and simplification

Corporate Sustainability Reporting Directive

This proposal is expressly designed to achieve a major simplification of the sustainability

reporting regime.

Corporate Sustainability Due Diligence Directive

The proposal contributes to regulatory fitness by reducing burdens and ensuring a more

coherent and simpler regulatory environment, while respecting the EU's sustainability

objectives.

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• Fundamental rights

Corporate Sustainability Reporting Directive

The proposal respects the fundamental rights enshrined, and adheres to the principles stated,

in the Charter of Fundamental Rights of the European Union. The Corporate Sustainability

Reporting Directive has an indirect positive impact on fundamental rights, given that

sustainability reporting requirements can influence corporate behaviour for the better. It

serves to make companies more aware of fundamental rights and positively influence how

they identify and manage actual and potential adverse impacts on fundamental rights. The

proposed modifications may partially diminish these positive impacts with regard to

companies that would no longer be subject to mandatory reporting requirements, but the

reduction of administrative burden on such companies should lead to other societal gains in

terms of wealth creation, employment and innovation, including innovation for sustainability.

Corporate Sustainability Due Diligence Directive

The proposal respects the fundamental rights enshrined, and adheres to the principles stated,

in the Charter of Fundamental Rights of the European Union. One of the CSDDD’s main

objective was to improve human rights protection through companies addressing their human

rights impacts in their chains of activities. The targeting of obligations regarding the chain of

activities, which requires action beyond direct business partners whenever the company in

scope of the Directive has plausible information pointing to such adverse impacts, is a

recognition of the fact that adverse human rights impacts often arise in indirect business

relationships. While their obligations to pro-actively identify such impacts will be reduced to

avoid burdens from systematically addressing all parts of often complex value chains,

companies will continue to have a responsibility to respect human rights along their value

chains in the future when they have such information.

4. BUDGETARY IMPLICATIONS

The proposal does not have any new implications on the Union budget.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

To monitor progress towards achieving the proposal’s specific objectives, the Commission

will explore the possibility of organising exchanges with stakeholders in different formats as

well as periodic surveys of users of sustainability information and of undertakings that report

such information, depending on the availability of financial resources. Article 6 of the CSRD

requires the Commission to present a report on the implementation of the Directive by April

2029. The implementation of the CSDDD as amended, and its effectiveness in reaching its

objectives, in particular in addressing adverse impacts, will also be subject to regular

evaluation according to Article 36 of that Directive. This proposal does not require an

implementation plan.

• Explanatory documents (for directives)

As the proposal introduces specific amendments to 4 existing directives, Member States

should either provide the Commission with the text of the specific amendments to national

provisions or, in the absence of such amendments, explain which specific national law

provision already implements the amendments provided in the proposal.

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• Detailed explanation of the specific provisions of the proposal

Corporate Sustainability Reporting Directive

Article 1 amends Directive 2006/43/EC (Audit Directive) as follows:

– paragraph (1) replaces Article 26a(3) of the Audit Directive to delete the time limits

for the Commission to adopt standards for limited assurance and to delete the

empowerment for the Commission to adopt standards for reasonable assurance

together with the related cross-references;

– paragraph (2) replaces Article 48a, second subparagraph, of the Audit Directive to

correct an error in the cross-reference to the limited assurance standards.

Article 2 amends Directive 2013/34/EU (Accounting Directive) as follows:

– paragraph (1) modifies in Article 1(3) of the Accounting Directive the size for an

undertaking to be in scope of sustainability reporting when that undertaking is a

credit institution or an insurance undertaking, to reflect the changes made to the size

of undertakings in the scope of Article 19a (i.e. large undertakings with more than

1000 employees on average during the financial year);

– paragraph (1) also specifies in Article 1(4) of the Accounting Directive that the

European Financial Stability Facility (EFSF) established by the EFSF Framework

Agreement is not subject to sustainability reporting;

– paragraph (2) amends Article 19a of the Accounting Directive by:

• limiting the undertakings required to prepare and publish individual

sustainability reporting to only large undertakings with more than 1000

employees on average during the financial year;

• introducing a requirement for Member States to ensure that, for the purposes of

reporting sustainability information as required by the Accounting Directive -

and with no prejudice to Union requirements to conduct a due diligence

process - undertakings do not seek to obtain from undertakings in their value

chain with not more than 1000 employees on average during the financial year

any information that goes beyond the information specified in the standards for

voluntary use to be adopted under Article 29ca, except for additional

sustainability information that is commonly shared between undertakings in the

sector concerned. Undertakings reporting on their value chain in accordance

with this requirement must be deemed to comply with sustainability reporting;

• deleting the option for listed SMEs to report based on a more proportionate set

of standards and deleting the 2-year opt out from sustainability reporting for

listed SMEs, to reflect the exclusion of these companies from the scope of

sustainability reporting;

– paragraph (3) inserts Article 19b to allow large undertakings with an average of more

than 1000 employees and a net turnover not exceeding EUR 450 000 000 during the

financial year to disclose information referred to in Article 8 of Regulation (EU)

2020/852 in a more flexible way;

– paragraph (4) amends Article 29a of the Accounting Directive by:

• limiting the undertakings required to prepare and publish consolidated

sustainability reporting to only parent undertakings of a large group with more

EN 15 EN

than 1000 employees on average during the financial year on a consolidated

basis;

• introducing a requirement for Member States to ensure that, for the purposes of

reporting sustainability information as required by the Accounting Directive -

and with no prejudice to Union requirements to conduct a due diligence

process - undertakings do not seek to obtain from undertakings in their value

chain with not more than 1000 employees on average during the financial year

any information that goes beyond the information specified in the standards for

voluntary use to be adopted under Article 29ca, except for additional

sustainability information that is commonly shared between undertakings in the

sector concerned. Undertakings reporting on their value chain in accordance

with this requirement must be deemed to comply with sustainability reporting;

– paragraph (5) inserts Article 29aa to allow large undertakings with an average of

more than 1000 employees and a net turnover not exceeding EUR 450 000 000, on a

consolidated basis, during the financial year to disclose information referred to in

Article 8 of Regulation (EU) 2020/852 in a more flexible way;

– paragraph (6) amends Article 29b of the Accounting Directive by:

• deleting the empowerment for the Commission to adopt sector-specific

standards by way of delegated acts;

• specifying that the sustainability reporting standards must not specify

disclosures requiring undertakings to obtain from undertakings in their value

chain with not more than 1000 employees on average during the financial year

any information that goes beyond the information to be disclosed pursuant to

the sustainability reporting standards for voluntary use to be adopted under

Article 29ca;

– paragraph (7) deletes Article 29c of the Accounting Directive on the Commission’s

empowerment to adopt a more proportionate set of standards for listed SMEs to

reflect the exclusion of these companies from the scope of sustainability reporting;

– paragraph (8) inserts the new Article 29ca in the Accounting Directive, which

empowers the Commission to adopt delegated acts to provide for sustainability

reporting standards for voluntary use by out-of-scope undertakings. These standards

must be proportionate and relevant to the capacities and the characteristics of these

undertakings and to the scale and complexity of their activities. They must also

specify, where possible, the structure to be used to present that information;

– paragraph (9) replaces Article 29d of the Accounting Directive to specify that until a

Delegated Regulation for the marking up of sustainability reporting is adopted,

undertakings are not required to markup their sustainability reporting;

– paragraph (10) replaces Article 33(1) of the Accounting Directive to specify that the

collective responsibility of members of an undertaking’s administrative, management

and supervisory bodies as regards the digitalisation of the management report is

limited to its publication in the single electronic format, including the digital marking

up;

– paragraph (11) amends Article 34 of the Accounting Directive by:

• deleting the reference to Article 29c in Article 34(1) to reflect the removal of

the sustainability reporting standards for listed SMEs;

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• adding paragraph 2a, which specifies that assurance providers prepare their

assurance opinion respecting the obligation on undertakings not to seek to

obtain from undertakings in their value chain with not more than 1000

employees on average during the financial year any information that goes

beyond the information specified in the standards for voluntary use;

– paragraph (12) amends Article 40a(1) of the Accounting Directive by:

• limiting the size for a subsidiary undertaking to be in scope of Article 40a to

the criteria for large undertakings as defined in Article 3(4) of the Accounting

Directive;

• increasing the net turnover threshold for a branch to be in scope of Article 40a

from EUR 40 million to EUR 50 million, to align with the turnover threshold

for large undertakings;

• increasing the net turnover threshold for the third-country undertaking to be in

scope of Article 40a from EUR 150 million generated in the Union to EUR 450

million;

– paragraph (13) amends Article 49 of the Accounting Directive to empower the

Commission to set out rules supplementing the reporting regime for activities that are

only partially taxonomy aligned.

Article 3 amends Article 5(2) of Directive (EU) 2022/2464 (Corporate Sustainability

Reporting Directive “CSRD”) to reflect the reduction of the undertakings in scope of

sustainability reporting under Articles 19a and 29a of the Accounting Directive. In particular:

– paragraph (1) point (a) deletes Article 5(2) subparagraph 1, point (a) of the CSRD to

reflect the exclusion from scope of some of the undertakings in wave 1;

– paragraph (1) point (b)(i) replaces Article 5(2) subparagraph 1, point (b)(i) of the

CSRD specifying which undertakings will be subject to individual sustainability

reporting in wave 2, i.e. large undertakings with more than 1000 employees on

average during the financial year;

– paragraph (1) point (b)(ii)) replaces Article 5(2) subparagraph 1, point (b)(ii) of the

CSRD specifying which undertakings will be subject to consolidated sustainability

reporting in wave 2, i.e. parent undertakings of large groups with more than 1000

employees on average, on a consolidated basis, during the financial year;

– paragraph (1) point (c) repeals Article 5(2) subparagraph 1, point (c) of the CSRD to

reflect the exclusion from the scope of listed SMEs;

– paragraph (2) point (a) deletes Article 5(2) subparagraph 3, point (a) of the CSRD to

reflect the exclusion from scope of some of the issuers in wave 1;

– paragraph (2) point (b)(i) replaces Article 5(2) subparagraph 3, point (b)(i) of the

CSRD specifying which issuers will be subject to individual sustainability reporting

in wave 2, i.e. issuers that are large undertakings with more than 1000 employees on

average during the financial year;

– paragraph (2) point (b)(ii) replaces Article 5(2) subparagraph 3, point (b)(ii) of the

CSRD specifying which issuers will be subject to consolidated sustainability

reporting in wave 2, i.e. issuers that are parent undertakings of large groups with

more than 1000 employees on average, on a consolidated basis, during the financial

year;

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– paragraph (2) point (c) repeals Article 5(2) subparagraph 3, point (c) of the CSRD to

reflect the exclusion from the scope of issuers that are SMEs.

Article 4 amends Directive (EU) 2024/1760 (Corporate Sustainability Due Diligence

Directive ‘CSDDD’) on the following main points: extending the scope of maximum

harmonisation, targeting due diligence, as a general rule, to direct business partners, removing

the duty to terminate the business relationship as a measure of last resort, limiting the notion

of ‘stakeholder’ and further restricting the stages of the due diligence process that require

stakeholder engagement, extending the intervals in which companies need to regularly

monitor the adequacy and effectiveness of due diligence measures, clarifying the principles

regarding pecuniary penalties and removing the ‘minimum cap’ for fines, removing aspects of

the civil liability clause and the rules regarding representative actions, changing the provisions

on the implementation of the climate transition plans, deleting the review clause regarding

financial services, and bringing forward the adoption of the first set of (general) implementing

guidelines by the Commission. In particular:

– paragraph (1) replaces Article 1(1), point (c) of the CSDDD to align the description

of the subject matter of the Directive with the changes proposed to Article 22(1)

regarding the implementation of the transition plans for climate change mitigation;

– paragraph (2) replaces Article 3(1), point (n) of the CSDDD on the definition of

‘stakeholders’ to reduce the scope of the ‘stakeholder’ notion by simplifying the

definition and limiting it to workers and their representatives, and to individuals and

communities whose rights or interests are (in case of actual adverse impacts) or could

be (in case of potential adverse impacts) “directly” affected by the products, services

and operations of the company, its subsidiaries and its business partners. This

includes, for instance, individuals or communities in the neighbourhood of plants

operated by business partners when they are directly affected by pollution (e.g., an

oil spill or harmful emissions), or indigenous people whose right to lands or

resources are directly affected by how a business partner acquires, develops or

otherwise uses land, forests or waters;

– paragraph (3) replaces Article 4 of the CSDDD on the level of harmonisation to

extend the scope of maximum harmonisation to several additional provisions of the

Directive that regulate the core aspects of the due diligence process. This includes in

particular the identification duty, the duties to address adverse impacts that have been

or should have been identified, and the duty to provide for a complaints and

notification mechanism. However, the proposal also recognises that there are legal

limits of what can be harmonised fully in a cross-sectoral framework directive

dealing with social and environmental protection and which essentially sets out a

general process to implement companies’ duty of care with regard to adverse impacts

linked to business activities. Extending maximum harmonisation beyond this scope

would risk undermining human – including labour – rights and environmental

standards, both existing or still to be developed, for instance to address emerging

risks linked to new products or services, while the practical benefits would be very

limited. Where such risks are addressed by Member States, in particular in areas

where the Union has limited competences like for instance labour law, they should

not be prevented from doing so where they consider this necessary to regulate how

the duty of care applies in specific circumstances;

– paragraph (4) amends Article 8 of the CSDDD on identifying and assessing actual

and potential adverse impacts by replacing paragraph (2), point (b) and paragraph

(4), and by adding new paragraphs (2a) and (5) concerning the chain of activities:

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• to limit due diligence measures, as a general rule, to the companies’ own

operations, those of their subsidiaries and, where related to their chains of

activities, those of their direct business partners. Consequently, when it comes

to business relationships, following a mapping of their value chains, companies

would be required to carry out an in-depth assessment only at the level of direct

business partners. At the same time, the proposal recognises that there can be

situations where companies have to look beyond their direct business partner,

namely where they have plausible information that suggests an adverse impact

at the level of an indirect business partner. This may, for instance, be the case

where the structure of the business relationship lacks economic rationale and

suggests that it was chosen to remove an otherwise direct supplier with harmful

activities from the purview of the company, where the company has received a

complaint or is aware of credible NGO or media reports about harmful

activities at the level of an indirect supplier or is aware of past incidents

involving the supplier, or where the company through its business contacts

knows about problems at a certain location (e.g., conflict area). In these cases,

companies should be required to further assess the situation. Where the

assessment confirms the likelihood or existence of the adverse impact, it should

be deemed to have been identified. In addition, a company should seek to

ensure that its code of conduct – which is part of its due diligence policy and

sets out the expectations as to how to protect human, including labour, rights

and the environment in business operations – is followed throughout the chain

of activities (contractual cascading). This aligns with the approach taken under

the German Supply Chain Act (Lieferkettensorgfaltspflicht-Gesetz) which

contains similar rules both as regards the focus on direct suppliers and the ways

in which due diligence should go beyond in light of the available information.

The company should also take into account SME support measures; and

• to further limit the trickle-down effect on companies with fewer than 500

employees (i.e. SMEs and small midcap companies), by limiting the amount of

the information that may be requested as part of the value chain mapping by

large companies to the information specified in the VSME sustainability

reporting standard, unless additional information is necessary, for instance

because the standards do not cover a relevant impact, and where such

information cannot reasonably be obtained in any other way.

– paragraphs (5) and (6) replace Article 10(6) and Article 11(7) of the CSDDD,

respectively, as regards disengagement in order to remove the duty to terminate the

business relationships in the case of both actual and potential adverse impacts.

Companies may find themselves in situations where their production heavily relies

on inputs from one or several specific suppliers. At the same time, where the

business operations of such a supplier are linked to severe adverse impacts, for

instance child labour or significant environmental harm, and the company has

unsuccessfully exhausted all due diligence measures to address these impacts, the

company, as a last resort should suspend the business relationship while continuing

to work with the supplier towards a solution, where possible using any increased

leverage resulting from the suspension.

– paragraph (7) amends Article 13 on meaningful engagement with stakeholders, by

amending paragraph (3), point (a), and deleting points (c) and (e), to clarify that

companies are only required to engage with “relevant” stakeholders, thereby

underlining that companies do not have to consult every possible stakeholder group

EN 19 EN

but may limit themselves to those stakeholders that have a link to the specific stage

of the due diligence process being carried out (e.g., affected individuals when

designing a remediation measure). In addition, the proposed amendments further

limit the stages of the due diligence process at which companies are required to

engage with stakeholders;

– paragraph (8) amends Article 15 of the CSDDD on monitoring to extend the intervals

in which companies need to regularly assess the adequacy and effectiveness of due

diligence measures, from 1 year to five years. This will significantly reduce burdens

not just for in-scope companies but also for their business partners, often SMEs,

which risk being at the receiving end of (detailed) information requests as part of

these monitoring exercises. At the same time, the proposal recognises that business

relationships, and the risks and impacts arising from the activities covered by such

business relationships, may evolve over time, sometimes even within short time

frames. Also, measures taken to address potential or actual impacts might turn out to

be inadequate or ineffective, based on experience gained with implementing them,

and indications for this may arise before the date for the next regular assessment.

Therefore, the company should carry out ad hoc assessments in these situations;

– paragraph (9) amends Article 19(3) of the CSDDD to require the Commission to

make available its general guidelines with practical guidance and best practices on

how to conduct due diligence in accordance with the Directive by half a year;

– paragraph (10) amends Article 22(1) concerning companies’ transition plans for

climate change mitigation with a view to ensuring more legal clarity and alignment

of the CSDDD with the sustainability reporting regime of the CSRD. More

particularly, the proposal introduces a modification regarding the requirement to put

into effect the transition plan for climate change mitigation. The proposal makes

clear that the plan should include implementation actions planned and taken. The

adoption of the plan and its initial and updated design remains subject to

administrative supervision;

– paragraph (11) replaces Article 27(4) as regards the imposition of pecuniary penalties

as part of public enforcement. The current text of Article 27 already clarifies that

“[i]n deciding whether to impose penalties and, if such penalties are imposed, in

determining their nature and appropriate level”, due account shall be taken of a series

of factors that determine the gravity of the infringement (in particular the nature,

gravity and duration of the infringement, and the severity of the impacts resulting

from that infringement) and whether there are attenuating (e.g., investments made

and any targeted support provided) or aggravating circumstances (e.g., recidivism).

In addition, the provision stipulates that any penalties imposed shall be “effective,

proportionate and dissuasive”. This aligns with similar provisions in other pieces of

EU legislation, for instance the General Data Protection Regulation. While the

Directive does not require Member States to set a maximum amount of any fines

(i.e., a ‘cap’ or ‘ceiling’), it stipulates that, in case Member States nevertheless

decide to do so, such a cap “shall be not less than 5 % of the net worldwide turnover

of the company”. The purpose for introducing this provision was to ensure a level

playing field in the Union, by avoiding that Member States set a cap at a level that

would undermine the effectiveness and dissuasiveness of any fines imposed on

companies under their jurisdiction. However, this provision has led to confusion. In

particular, while such a cap says nothing about the actual fines imposed in a specific

case, it has sometimes been misunderstood as a minimum fines amount. To clarify

the situation, the proposed amendments address the issue of the level playing field

EN 20 EN

differently, namely by tasking the Commission with developing fining guidelines (an

instrument that also exists in other areas, e.g., competition law and data protection) in

collaboration with the Member States and by prohibiting Member States from setting

a fines cap that would prevent supervisory authorities from imposing penalties in

accordance with the factors and principles set out in Article 27(1) and (2).

Furthermore, the proposal deletes the requirement for the fine to be commensurate to

the company’s net worldwide turnover;

– paragraph (12) amends Article 29 of the CSDDD as regards civil liability by deleting

paragraph (1), paragraph (3), point (d) and paragraph (7), and changing paragraphs

(2), (4) and (5):

• to remove the specific, EU-wide liability regime in the Directive. At the same

time, in line with the core objective of the Directive to ensure the protection of

victims against human rights violations and environmental harm resulting from

business operations, the proposed amendments maintain the requirements for

effective access to justice, including the right to full compensation in case a

company is held liable for a failure to comply with the due diligence

requirements under this Directive in accordance with national law and where

such failure caused damage, while also protecting companies from over-

compensation;

• in view of the different rules and traditions that exist at national level when it

comes to allowing representative action, to delete the specific requirement set

out in the CSDDD in this regard; and

• for the same reason, by deleting the requirement for Member States to ensure

that the liability rules are of overriding mandatory application in cases where

the law applicable to claims to that effect is not the national law of the Member

State; and

– paragraph (13) removes Article 36(1) of the CSDDD, deleting the first review clause

of the Directive that would require the Commission to submit “no later than 26 July

2026” a report to the European Parliament and to the Council on the necessity of

laying down additional sustainability due diligence requirements tailored to regulated

financial undertakings with respect to the provision of financial services and

investment activities, and the options for such due diligence requirements as well as

their impacts. It is proposed to delete this review clause as it does not leave any time

to take into account the experience with the newly established, general due diligence

framework.

Article 5 requires Member States to transpose this Directive by [12 months after into force] at

the latest, and to communicate to the Commission the text of their transposing measures.

Article 6 specifies that this Directive enters into force 20 days after its publication in the

Official Journal of the European Union.

EN 21 EN

2025/0045 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as

regards certain corporate sustainability reporting and due diligence requirements

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Articles 50 and 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee20,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) In its Communication of 11 February 2025 entitled ‘A simpler and faster Europe:

Communication on implementation and simplification’,21 the European Commission

set out a vision for an implementation and simplification agenda that delivers fast and

visible improvements for people and business on the ground. This requires more than

an incremental approach and the Union must take bold action to achieve this goal. The

Commission, the European Parliament, the Council, Member States’ authorities at all

levels and stakeholders need to work together to streamline and simplify EU, national

and regional rules and implement policies more effectively.

(2) In the context of the Commission’s commitment to reduce reporting burdens and

enhance competitiveness, it is necessary to amend Directives 2006/43/EC22,

2013/34/EU23, (EU) 2022/246424 and (EU) 2024/1760 of the European Parliament and

20 OJ C […], […], p. […]. 21 Communication from the Commission to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions of 11 February 2025, ‘A simpler and faster Europe: Communication

on implementation and simplification’, COM/2025/47 final. 22 Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory

audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and

83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87,

ELI: http://data.europa.eu/eli/dir/2006/43/oj). 23 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual

financial statements, consolidated financial statements and related reports of certain types of

undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and

repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI:

http://data.europa.eu/eli/dir/2013/34/oj). 24 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022

amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive

EN 22 EN

of the Council25, whilst maintaining the policy objectives of the European Green

Deal26, and the Sustainable Finance Action Plan27.

(3) Article 26a(1) of Directive 2006/43/EC requires Member States to ensure that

statutory auditors and audit firms carry out the assurance of sustainability reporting in

compliance with limited assurance standards to be adopted by the Commission. Article

26a(3) of that Directive requires the Commission to adopt those standards by 1

October 2026. Undertakings have raised concerns on the work carried out by the

assurance providers and have expressed the need for flexibility in addressing specific

risks and critical issues identified in the areas of sustainability assurance. To enable

the Commission to take account of those concerns, it should be given more flexibility

in adopting those standards. In any case, the Commission will issue targeted assurance

guidelines by 2026 that clarify the necessary procedures that assurance providers are

to perform as part of their limited assurance engagement before adopting the standards

by delegated act.

(4) Article 26a(3), second subparagraph, of Directive 2006/43/EC empowers the

Commission to adopt standards for reasonable assurance by 1 October 2028, following

an assessment of feasibility. To avoid an increase in costs of assurance for

undertakings, the requirement to adopt such standards for reasonable assurance should

be removed.

(5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and

medium-sized undertakings with securities admitted to trading on an EU regulated

market, excluding micro-undertakings, to prepare and publish a sustainability

statement at individual level. To reduce the reporting burden on undertakings, the

obligation to prepare and publish a sustainability statement at individual level should

be reduced to large undertakings with an average of more than 1000 employees during

the financial year. Considering that for an undertaking to be large it has to exceed two

out of the three criteria in Article 3(4) of Directive 2013/34/EU, this means that to be

subject toto the reporting requirements an undertakings must have an average of more

than 1000 employees during the financial year and either a net turnover above EUR 50

million or a balance sheet total above EUR 25 million.

(6) A balance needs to be found between the objectives of data generation and reduction

of administrative burden. Sustainability reporting, including the information referred

to in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the

Council28, of large undertakings with an average of more than 1000 employees during

the financial year is indispensable to understand the transition to a climate-neutral

2013/34/EU, as regards corporate sustainability reporting (OJ L 322, 16.12.2022, p. 15, ELI:

http://data.europa.eu/eli/dir/2022/2464/oj). 25 Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate

sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859

(OJ L, 2024/1760, 5.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1760/oj). 26 Communication from the Commission to the European Parliament, the European Council, the Council,

the European Economic and Social Committee and the Committee of the Regions of 11 December

2019, ‘The European Green Deal’, COM/2019/640 final. 27 Communication from the Commission to the European Parliament, the European Council, the Council,

the European Central Bank, the European Economic and Social Committee and the Committee of the

Regions of 8 March 2018, ‘Action Plan: Financing Sustainable Growth’, COM/2018/097 final. 28 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the

establishment of a framework to facilitate sustainable investment, and amending Regulation (EU)

2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

EN 23 EN

economy. In the light of the balance to be found between the objectives of data

generation and reduction of administrative burden, large undertakings within the new

scope for sustainability reporting that have a net turnover not exceeding EUR 450 000

000 during the financial year should be able to disclose information referred to in

Article 8 of Regulation (EU) 2020/852 in a more flexible way. The Commission

should be empowered to set out rules supplementing the reporting regime for those

undertakings. It should in particular be clarified that the Commission is empowered to

specify the reporting regime for activities that are only partially taxonomy aligned.

(7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance

undertakings that are large undertakings or small and medium-size undertakings –

excluding micro-undertakings – with securities admitted to trading on an EU regulated

market are subject to the sustainability reporting requirements set out in that Directive,

regardless of their legal form. Considering that the scope of individual sustainability

reporting should be reduced to large undertakings with an average of more than 1000

employees during the financial year, that reduction in scope should also apply to credit

institutions and insurance undertakings.

(8) The European Financial Stability Facility (EFSF) established by the EFSF Framework

Agreement is subject to the sustainability reporting requirements set out in Directive

2013/34/EU, although it is exempted from the sustainability reporting regime set out

in Directive 2004/109/EC of the European Parliament and of the Council29 pursuant to

Article 8 of that Directive. Despite it being a large undertaking incorporated in a legal

form listed in Annex I to Directive 2013/34/EU, the EFSF has a mandate - i.e. to

safeguard financial stability in the Union by providing temporary financial assistance

to Member States whose currency is the euro – that is largely similar to the one of the

European Stability Mechanism (ESM), which is not subject to sustainability reporting

requirements. For the EFSF to benefit from the same treatment as the ESM as regards

sustainability reporting, and for consistency with the exemption regime provided by

Directive 2004/109/EC, the EFSF should be exempted from the regime on

sustainability reporting provided by Directive 2013/34/EU.

(9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information

about the undertaking’s own operations and about its value chain. It is necessary to

reduce the reporting burden for undertakings in the value chain that are not required to

report on their sustainability. The reporting undertaking, for the purposes of reporting

sustainability information at individual or at consolidated level, as required by

Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due

diligence process, should therefore not seek to obtain from undertakings established in

or outside of the Union in its value chain that have up to 1000 employees on average

during the financial year any information that goes beyond the information specified in

the standards for voluntary use by undertakings that are not required to report on their

sustainability. The reporting undertaking should, however, be allowed to collect from

such undertakings in its value chain any additional sustainability information that is

commonly shared between undertakings in the sector concerned. Undertakings

reporting on their value chain in accordance with those limitations should be deemed

to comply with the obligation to report on their sustainability. Assurance providers

29 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the

harmonization of transparency requirements in relation to information about issuers whose securities are

admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 39, 31.12.2004, p.

38, ELI: http://data.europa.eu/eli/dir/2004/109/oj).

EN 24 EN

should prepare their assurance opinion respecting the obligation on undertakings not to

seek to obtain from undertakings in their value chain that have up to 1000 employees

on average during the financial year any information that goes beyond the information

specified in the standards for voluntary use by undertakings that are not required to

report on their sustainability. For that purpose, the Commission should be empowered

to adopt a delegated act to provide for sustainability reporting standards for voluntary

use by undertakings that are not required to report on their sustainability. Those

standards should be proportionate to, and relevant for, the capacities and the

characteristics of those undertakings and to the scale and complexity of their activities.

Those standards should also specify, where possible, the structure to be used to present

that information.

(10) Article 29c(1) of Directive 2013/34/EU allows small and medium-sized undertakings

with securities admitted to trading on an EU regulated market, small and non-complex

institutions and captive re(insurance) undertakings, to report sustainability information

in accordance with the limited set of standards to be adopted by the Commission.

Considering that small and medium-sized undertakings with securities admitted to

trading on an EU regulated market should be excluded from sustainability reporting,

the empowerment for the Commission to adopt delegated acts to provide for

sustainability reporting standards for those small and medium-sized undertakings

should be removed.

(11) Article 19a(7) of Directive 2013/34/EU allows small and medium-sized undertakings

with securities admitted to trading on an EU regulated market to opt out from

sustainability reporting for the first two years of application of those requirements.

Considering that small and medium-sized undertakings should be excluded from the

sustainability reporting, the provision allowing for the two-year opt out should be

removed.

(12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to

prepare and publish a sustainability statement at consolidated level. To reduce the

reporting burden on those parent undertakings, the scope of that obligation should be

reduced to parent undertakings of large groups with an average of more than 1000

employees, on a consolidated basis, during the financial year.

(13) Article 29b(1), third subparagraph, Directive 2013/34/EU empowers the Commission

to adopt sector-specific reporting standards by way of delegated acts, with a first set of

such standards to be adopted by 30 June 2026. To avoid an increase in the number of

prescribed datapoints that undertakings should report, that empowerment should be

removed.

(14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to

not specify disclosures requiring undertakings to obtain from small and medium-sized

undertakings in their value chain any information that goes beyond the information to

be disclosed pursuant to the sustainability reporting standards for small and medium-

sized undertakings with securities admitted to trading on an EU regulated market.

Considering that small and medium-sized undertakings with securities admitted to

trading on an EU regulated market should be excluded from sustainability reporting,

and in order to reduce the reporting burden for undertakings in the value chain that are

not required to report on their sustainability, the sustainability reporting standards

should not specify disclosures requiring undertakings to obtain from undertakings in

their value chain that have up to 1000 employees on average during the financial year

any information that goes beyond the information to be disclosed pursuant to the

EN 25 EN

sustainability reporting standards for voluntary use by undertakings that are not

required to report on their sustainability.

(15) Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements

in Articles 19a and 29a of that Directive to prepare their management report, or

consolidated management report, where applicable, in the electronic reporting format

specified in Article 3 of Commission Delegated Regulation (EU) 2019/81530 and to

mark up their sustainability reporting, including the disclosures provided for in Article

8 of Regulation (EU) 2020/852 of the European Parliament and of the Council31, in

accordance with the electronic reporting format to be specified in that Delegated

Regulation. To provide clarity to undertakings, it should be specified that until such

rules on the marking up are adopted by way of that a Delegated Regulation, for the

marking up of sustainability reporting is adopted, undertakings are should not be

required to mark-up their sustainability reporting.

(16) Article 33(1) of Directive 2013/34/EU specifies that the members of the

administrative, management and supervisory bodies of an undertaking have collective

responsibility for ensuring that the following documents are drawn up and published in

accordance with the requirements of that Directive. To provide flexibility do for

undertakings and reduce their reporting burden, it should be specified that the

collective responsibility of the members of the administrative, management and

supervisory bodies of an undertaking for compliance with the requirements of Article

29d of that Directive as regards the digitalisation of the management report is limited

to its publication in the single electronic format, including the marking up of the

sustainability reporting therein.

(17) Pursuant to Article 40a(1), fourth and fifth subparagraph of Directive 2013/34/EU, a

subsidiary in the Union of a third-county undertaking that generates a net turnover of

more than EUR 150 million in the Union, or, in the absence of such subsidiary, a

branch in the Union that generates a net turnover of more than EUR 40 million, is to

publish and make accessible sustainability information at the group level of the third-

country parent undertaking. To reach closer alignment with the criteria used to define

which undertakings are in the scope of Directive (EU) 2024/1760, the net turnover

threshold for the third-country undertaking should be raised from EUR 150 000 000 to

EUR 450 000 000. For reasons of consistency and burden reduction, the size for a

subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted.

The size of the subsidiary undertaking should be that of a large undertaking, whilst the

net turnover criteria for the branch should be raised from EUR 40 000 000 to EUR

50 000 000, to align with the net turnover threshold for large undertakings.

(18) Article 5(2), first subparagraph, of Directive (EU) 2022/2464 specifies the dates by

which the Member States are to apply the sustainability reporting requirements set out

in Directive 2013/34/EU, with different dates depending on the size of the undertaking

concerned. Considering that the scope of the individual sustainability reporting

requirements should be reduced to include only large undertakings with more than

30 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive

2004/109/EC of the European Parliament and of the Council with regard to regulatory technical

standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1, ELI:

http://data.europa.eu/eli/reg_del/2019/815/oj). 31 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the

establishment of a framework to facilitate sustainable investment, and amending Regulation (EU)

2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

EN 26 EN

1000 employees on average during the financial year, and that the scope of the

consolidated sustainability reporting requirements should be reduced accordingly, the

criteria for determining the dates of application should be adjusted, and the reference

to small and medium-sized undertakings with securities admitted to trading on an EU

regulated market should be removed.

(19) Article 5(2), third subparagraph, of Directive (EU) 2022/2464 specifies the dates by

which the Member States are to apply the sustainability reporting requirements set out

in Directive 2004/109/EC, with different dates depending on the size of the issuer

concerned. Considering that the scope of the individual sustainability reporting

requirements should be reduced to include only large undertakings with more than

1000 employees on average during the financial year, and that the scope of the

consolidated sustainability reporting requirements should be reduced accordingly, the

criteria for determining the dates of application should be adjusted, and the reference

to small and medium-sized undertakings should be removed.

(20) Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing,

in their national law, provisions within the field covered by the Directive laying down

human rights and environmental due diligence obligations diverging from those laid

down in Article 8(1) and (2), and Article 10(1) of that Directive. To ensure that

Member States do not go beyond that Directive and to avoid the creation of a

fragmented regulatory landscape resulting in legal uncertainty and unnecessary

burden, the full harmonisation provisions of Directive (EU) 2024/1760 should be

expanded to additional provisions regulating the core aspects of the due diligence

process. That includes, in particular, the identification duty, the duties to address

adverse impacts that have been or should have been identified, the duties to engage

with stakeholders in certain cases, and the duty to provide for a complaints and

notification mechanism. At the same time, Member States should be allowed to

introduce more stringent or more specific provisions on other aspects, including to

address emerging risks linked to new products or services.

(21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large

companies above a certain size conduct risk-based human rights and environmental

due diligence. To reduce burdens on companies that have to comply with that

obligation, the required due diligence should, as a general rule, be limited to the

company’s own operations, those of its subsidiaries and those of its direct business

partners (‘tier 1’). Consequently, when it comes to business relationships, companies

should, after having mapped their chains of activities, be required to carry out in-depth

assessments as regards direct business partners only. Companies should, however,

look beyond their direct business relationships where they have plausible information

that suggests an adverse impact at the level of an indirect business partner. Plausible

information means information of an objective character that allows the company to

conclude that there is a reasonable likelihood that the information is true. This may be

the case where the company concerned has received a complaint or is in the possession

of information, for example through credible media or NGO reports, reports of recent

incidents, or through recurring problems at certain locations about likely or actual

harmful activities at the level of an indirect business partner. Where the company has

such information, it should carry out an in-depth assessment. Companies should also

carry out in-depth assessments with respect to adverse impacts arising beyond their

direct business partner where the structure of this business relationship lacks economic

rationale and suggests that it was chosen to remove an otherwise direct supplier with

harmful activities from the purview of the company. Where the in-depth assessment

EN 27 EN

confirms the likelihood or existence of the adverse impact, it should then be deemed to

be identified. In addition, companies should seek to ensure that their code of conduct –

which is part of their due diligence policy and sets out the expectations as to how to

protect human, including labour, rights and the environment in business operations – is

followed throughout the chain of activities in accordance with contractual cascading

and SME support.

(22) To limit the trickle-down effect on small and medium-sized undertakings and small

midcap companies when it comes to mapping the value chain to identify adverse

impacts, large companies should limit information requests to the information

specified in the standards for voluntary use referred to in Article 29a of Directive (EU)

2013/34/EU, unless they need additional information to carry out the mapping and

they cannot obtain that information in any other reasonable way.

(23) Companies may find themselves in situations where their production heavily relies on

inputs from one or several specific suppliers. At the same time, where the business

operations of such a supplier are linked to severe adverse impacts, including child

labour or significant environmental harm, and the company has unsuccessfully

exhausted all due diligence measures to address those impacts, the company, as a last

resort should suspend the business relationship while continuing to work with the

supplier towards a solution, where possible using any increased leverage resulting

from the suspension.

(24) To reduce burdens on companies and make stakeholder engagement more

proportionate, companies should only have to engage with workers, their

representatives including trade unions, and individuals and communities whose rights

or interests are or could be directly affected by the products, services and operations of

the company, its subsidiaries and its business partners, and that have a link to the

specific stage of the due diligence process being carried out. That includes individuals

or communities in the neighbourhood of plants operated by business partners where

those individuals or communities are directly affected by pollution, or indigenous

people whose right to lands or resources are directly affected by how a business

partner acquires, develops or otherwise uses land, forests or waters. Moreover,

stakeholder engagement should only be required for certain parts of the due diligence

process, namely at the identification stage, for the development of (enhanced) action

plans and when designing remediation measures.

(25) To reduce administrative burdens on companies, the Commission’s deadline for the

adoption of general due diligence guidelines should be advanced to 26 July 2026. In

parallel, the application deadline for Directive (EU) 2024/1760 for the first group of

companies should be deferred to 26 July 2028 in accordance with Directive (EU)

XXX/XXX32. That two-year interval will should provide companies with sufficient

time to take into account the practical guidance and best practices included in the

Commission’s guidelines when implementing due diligence measures.

(26) To ensure better alignment of Directive (EU) 2024/1760 with the sustainability

reporting regime laid down in Directive (EU) 2022/2464, the requirement to put into

effect the transition plan for climate change mitigation should be replaced by a

clarification that the obligation of companies to adopt a transition plan includes

outlining implementing actions, planned and taken. The obligation to adopt the plan

and its initial and updated design remains subject to administrative supervision.

32 Directive (EU) 2025/XX of ……….

EN 28 EN

(27) Article 27(1) of Directive EU 2024/1760 requires Member States to lay down

penalties that are to be “effective, proportionate and dissuasive”. Article 27(2) of that

Directive requires Member States, when deciding whether to impose penalties and, if

so, when determining their nature and appropriate level, to take due account of a series

of factors that determine the gravity of the infringement and attenuating or aggravating

circumstances. Article 27(4) of that Directive requires Member States to base any

imposed pecuniary penalties on the net worldwide turnover of the company concerned.

However, given the fact that Member States already have to take into account the

series of factors laid down in Article 27(2) of that directive, the need to base pecuniary

penalties on the net worldwide turnover of the company concerned is superfluous.

However, to ensure a level playing field across the Union, Member States should be

prohibited from introducing in their national law a ceiling or cap for any pecuniary

penalties imposed on companies under their jurisdiction that would prevent

supervisory authorities from imposing penalties in accordance with the factors laid

down in Article 27(2). Moreover, to harmonise enforcement practices across the

Union, the Commission, in collaboration with the Member States, should develop

guidelines to assist supervisory authorities in determining the level of penalties.

(28) To limit possible litigation risks linked to the harmonised civil liability regime of

Directive (EU) 2024/1760, the specific, Union-wide liability regime currently

provided for in Article 29(1) of that Directive should be removed. At the same time, as

a matter of both international and Union law, Member States should be required to

ensure that victims of adverse impacts have effective access to justice and to guarantee

their right to an effective remedy, as enshrined in Article 2(3) of the International

Covenant on Civil and Political Rights, Article 8 of the Universal Declaration of

Human Rights, Article 9(3) of the Convention on Access to Information, Public

Participation in Decision-making and Access to Justice in Environmental Matters

(Aarhus Convention) and Article 47 of the EU Charter of Fundamental Rights.

Member States should therefore ensure that, in case a company is held liable for a

failure to comply with the due diligence requirements laid down in Directive (EU)

2024/1760, and that where such failure caused damage, victims are able to receive full

compensation, which should be granted in accordance with the principles of

effectiveness and equivalence, while balancing this through safeguards should prevent

against overcompensation. In view of the different rules and traditions that exist at

national level when it comes to allowing representative actions, the specific

requirement in that regard in Directive (EU) 2024/1760 should be deleted. Such

deletion is without prejudice to any provision of the applicable national law allowing a

trade union, non-governmental human rights or environmental organisation, other non-

governmental organisation or a national human rights institution to bring actions to

enforce the rights of the alleged injured party, or to support such actions brought

directly by such party. Furthermore, for the same reason, the requirement for Member

States to ensure that the liability rules are of overriding mandatory application in cases

where the law applicable to claims to that effect is not the national law of the Member

State should be deleted. That deletion does not restrict the possibility for Member

States to provide that the provisions of national law transposing Article 29 of Directive

EU 2024/1760 are of overriding mandatory application in accordance with Article 16

of Regulation (EC) No 864/2007, in cases where the law applicable to claims to that

effect is not the national law of a Member State.

(29) Article 36(1) of Directive (EU) 2024/1760 requires the Commission to submit by no

later than 26 July 2026 a report to the European Parliament and to the Council on the

necessity of laying down additional sustainability due diligence requirements tailored

EN 29 EN

to regulated financial undertakings with respect to the provision of financial services

and investment activities, and the options for such due diligence requirements and

their impacts. As that review clause does not leave any time to take into account the

experience with the newly established, general due diligence framework, it should be

removed.

(30) Since the objectives of this Directive cannot be sufficiently achieved by the Member

States but can rather, by reason of the scale or effects of the action, be better achieved

at Union level, the Union may adopt measures, in accordance with the principle of

subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance

with the principle of proportionality as set out in that Article, this Directive does not

go beyond what is necessary in order to achieve those objectives.

(31) Directive 2006/43/EC, Directive 2013/34/EU, Directive (EU) 2022/2464 and Directive

(EU) 2024/1760 should therefore be amended accordingly,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Amendments to Directive 2006/43/EC

Directive 2006/43/EC is amended as follows:

(1) in Article 26a, paragraph 3 is replaced by the following:

‘3. The Commission shall be empowered to adopt delegated acts in accordance

with Article 48a in order to supplement this Directive in order to provide for limited

assurance standards setting out the procedures that the auditor(s) and the audit

firm(s) shall perform in order to draw his, her or its conclusions on the assurance of

sustainability reporting, including engagement planning, risk consideration and

response to risks and type of conclusions to be included in the assurance report on

sustainability reporting, or, where relevant, in the audit report.

The Commission may adopt the assurance standards referred to in the first

subparagraph only where those standards:

(a) have been developed with proper due process, public oversight and

transparency;

(b) contribute a high level of credibility and quality to the annual or consolidated

sustainability reporting; and

(c) are conducive to the Union public good.’;

(2) in Article 48a(2), the second subparagraph is replaced by the following:

‘The power to adopt delegated acts referred to in Article 26a(3) shall be conferred on

the Commission for an indeterminate period of time.’.

Article 2

Amendments to Directive 2013/34/EU

Directive 2013/34/EU is amended as follows:

(1) Article 1 is amended as follows:

EN 30 EN

(a) in paragraph 3, the introductory wording is replaced by the following:

‘The coordination measures prescribed by Articles 19a, 19b, 29a, 29aa, 29d, 30

and 33, Article 34(1), second subparagraph, point (aa), Article 34(2) and (3),

and Article 51 of this Directive shall also apply to the laws, regulations and

administrative provisions of the Member States relating to the following

undertakings regardless of their legal form, provided that those undertakings

are large undertakings which, on their balance sheet dates, exceed the average

number of 1000 employees during the financial year:’;

(b) paragraph 4 is replaced by the following:

‘4. The coordination measures prescribed by Articles 19a, 29a and 29d

shall not apply to the European Financial Stability Facility (EFSF) established

by the EFSF Framework Agreement nor to financial products listed in Article

2, point (12), (b) and (f) of Regulation (EU) 2019/2088 of the European

Parliament and of the Council*.

_____________________________________________

* Regulation (EU) 2019/2088 of the European Parliament and of the Council of

27 November 2019 on sustainability-related disclosures in the financial

services sector (OJ L 317, 9.12.2019, p. 1, ELI:

http://data.europa.eu/eli/reg/2019/2088/oj).’;

(2) Article 19a is amended as follows:

(a) in paragraph 1, the first subparagraph is replaced by the following:

‘Large undertakings which, on their balance sheet dates, exceed the average

number of 1000 employees during the financial year shall include in their

management report information necessary to understand the undertaking’s

impacts on sustainability matters, and information necessary to understand how

sustainability matters affect the undertaking’s development, performance and

position.’;

(b) paragraph 3 is amended as follows:

(i) the first subparagraph is replaced by the following:

‘Where applicable, the information referred to in paragraphs 1 and 2 shall

contain information about the undertaking’s own operations and about its

value chain, including its products and services, its business relationships

and its supply chain. Member States shall ensure that, for the reporting of

sustainability information as required by this Directive, undertakings do

not seek to obtain from undertakings in their value chain which, on their

balance sheet dates, do not exceed the average number of 1000

employees during the financial year any information that exceeds the

information specified in the standards for voluntary use referred to in

Article 29ca, except for additional sustainability information that is

commonly shared between undertakings in the sector concerned.

Undertakings that report the necessary value chain information without

reporting from undertakings in their value chain which, on their balance

sheet dates, do not exceed the average number of 1000 employees during

the financial year any information that exceeds the information specified

in the standards for voluntary use referred to in Article 29ca, except for

additional sustainability information that is commonly shared between

EN 31 EN

undertakings in the sector concerned, shall be deemed to have complied

with the obligation to report value chain information set out in this

paragraph.’;

(ii) the following subparagraph is added:

‘The first subparagraph is without prejudice to Union requirements on

undertakings to conduct a due diligence process.’;

(c) paragraphs 6 and 7 are deleted;

(3) the following Article 19b is inserted:

‘Article 19b

Optional taxonomy reporting for certain undertakings

1. Member States shall ensure that, by way of derogation from Article 8 of

Regulation (EU) 2020/852, undertakings as referred to in Article 19a(1) of this

Directive which, on their balance sheet dates, do not exceed a net turnover of EUR

450 000 000 during the financial year shall apply the paragraphs 2, 3 and 4 of this

Directive.

2. An undertaking as referred to in paragraph 1 that claims that its activities are

associated with economic activities that qualify as environmentally sustainable under

Articles 3 and 9 of Regulation (EU) 2020/852 or with economic activities that fulfil

only certain requirements of that provision shall include in its management report

information on how and to what extent its activities are associated with those

economic activities.

3. In particular, a non-financial undertaking that claims that its activities are

associated with economic activities that qualify as environmentally sustainable under

Articles 3 and 9 of Regulation (EU) 2020/852 shall disclose the following indicators:

(a) the proportion of its turnover derived from products or services associated with

economic activities that qualify as environmentally sustainable under Articles 3

and 9 of that Regulation;

(b) the proportion of its capital expenditure related to assets or processes

associated with economic activities that qualify as environmentally sustainable

under Articles 3 and 9 of that Regulation.

A non-financial undertaking that discloses the indicators referred to in the first

subparagraph may disclose the proportion of its operating expenditure related to

assets or processes associated with economic activities that qualify as

environmentally sustainable under Articles 3 and 9 of Regulation (EU) 2020/852.

4. In particular, a non-financial undertaking that claims that its activities are

associated with economic activities that fulfil only certain requirements of Article 3

of Regulation (EU) 2020/852 shall disclose the following indicators:

(a) the proportion of its turnover derived from products or services associated with

economic activities fulfilling only certain requirements of Article 3 of that

Regulation;

(b) the proportion of its capital expenditure related to assets or processes

associated with economic activities that fulfil only certain requirements of

Article 3 of that Regulation;

EN 32 EN

A non-financial undertaking that discloses the indicators referred to in the first

subparagraph may disclose the proportion of its operating expenditure related to

assets or processes associated with economic activities that fulfil only certain

requirements of Article 3 of Regulation (EU) 2020/852.

5. The Commission shall adopt a delegated act in accordance with Article 49 of

this Directive to supplement paragraphs 1, 2, 3 and 4 of this Article to specify the

content and presentation of the information to be disclosed pursuant to those

paragraphs, including the content of the information concerning economic activities

that fulfil only certain of the criteria set out in Article 3 of Regulation (EU)

2020/852, and the methodology to be used in order to comply with them, taking into

account the specificities of both financial and non-financial undertakings and the

technical screening criteria established pursuant to that Regulation.’;

(4) Article 29a is amended as follows:

(a) in paragraph 1, the first subparagraph is replaced by the following:

‘Parent undertakings of a large group which, on their balance sheet dates,

exceed the average number of 1000 employees, on a consolidated basis, during

the financial year, shall include in the consolidated management report

information necessary to understand the group’s impacts on sustainability

matters, and information necessary to understand how sustainability matters

affect the group’s development, performance and position.’;

(b) paragraph 3 is amended as follows:

(i) the first subparagraph is replaced by the following:

‘Where applicable, the information referred to in paragraphs 1 and 2 shall

contain information about the group’s own operations and about its value

chain, including its products and services, its business relationships and

its supply chain. Member States shall ensure that, for the reporting of

sustainability information as required by this Directive, undertakings do

not seek to obtain from undertakings in their value chain which, on their

balance sheet dates, do not exceed the average number of 1000

employees during the financial year any information that exceeds the

information specified in the standards for voluntary use referred to in

Article 29ca, except for additional sustainability information that is

commonly shared between undertakings in the sector concerned.

Undertakings that report the necessary value chain information without

reporting from undertakings in their value chain which, on their balance

sheet dates, do not exceed the average number of 1000 employees during

the financial year any information that exceeds the information specified

in the standards for voluntary use referred to in Article 29ca, except for

additional sustainability information that is commonly shared between

undertakings in the sector concerned, shall be deemed to have complied

with the obligation to report value chain information set out in this

paragraph.’;

(ii) the following subparagraph is added:

‘The first subparagraph is without prejudice to Union requirements on

undertakings to conduct a due diligence process.’;

(5) the following Article 29aa is inserted:

EN 33 EN

‘Article 29aa

Optional taxonomy reporting for certain parent undertakings

1. Member States shall ensure that, by way of derogation from Article 8 of

Regulation (EU) 2020/852, parent undertakings as referred to in Article 29a(1) of

this Directive which, on their balance sheet dates, do not exceed a net turnover of

EUR 450 000 000, on a consolidated basis, during the financial year shall apply the

paragraphs 2, 3 and 4 of this Directive.

2. A parent undertaking as referred to in paragraph 1 that claims that its activities

are associated with economic activities that qualify as environmentally sustainable

under Articles 3 and 9 of Regulation (EU) 2020/852 or with economic activities that

fulfil only certain requirements of that provision shall include in its management

report information on how and to what extent its activities are associated with those

economic activities.

3. In particular, a non-financial parent undertaking that claims that its activities

are associated with economic activities that qualify as environmentally sustainable

under Articles 3 and 9 of Regulation (EU) 2020/852 shall disclose the following

indicators:

(a) the proportion of its turnover derived from products or services associated with

economic activities that qualify as environmentally sustainable under Articles 3

and 9 of that Regulation;

(b) the proportion of its capital expenditure related to assets or processes

associated with economic activities that qualify as environmentally sustainable

under Articles 3 and 9 of that Regulation.

A non-financial parent undertaking that discloses the indicators referred to in the first

subparagraph may disclose the proportion of its operating expenditure related to

assets or processes associated with economic activities that qualify as

environmentally sustainable under Articles 3 and 9 of that Regulation.

4. In particular, a non-financial parent undertaking that claims that its activities

are associated with economic activities that fulfil only certain requirements of Article

3 of Regulation (EU) 2020/852 shall disclose the following indicators:

(a) the proportion of its turnover derived from products or services associated with

economic activities fulfilling only certain requirements of Article 3 of that

Regulation;

(b) the proportion of its capital expenditure related to assets or processes

associated with economic activities that fulfil only certain requirements of

Article 3 of that Regulation;

A non-financial parent undertaking that discloses the indicators referred to in the first

subparagraph may disclose the proportion of its operating expenditure related to

assets or processes associated with economic activities that fulfil only certain

requirements of Article 3 of that Regulation.

5. The Commission shall adopt a delegated act in accordance with Article 49 of

this Directive to supplement paragraphs 1, 2, 3 and 4 of this Article to specify the

content and presentation of the information to be disclosed pursuant to those

paragraphs, including the content of the information concerning economic activities

that fulfil only certain of the criteria set out in Article 3 of Regulation (EU)

EN 34 EN

2020/852, and the methodology to be used in order to comply with them, taking into

account the specificities of both financial and non-financial undertakings and the

technical screening criteria established pursuant to this Regulation.’;

(6) Article 29b is amended as follows:

(a) in paragraph 1, the third and fourth subparagraphs are deleted;

(b) in paragraph 4, first subparagraph, the last sentence is replaced by the

following:

‘Sustainability reporting standards shall not specify disclosures that would

require undertakings to obtain from undertakings in their value chain which, on

their balance sheet dates, do not exceed the average number of1000 employees

during the financial year any information that exceeds the information to be

disclosed pursuant to the sustainability reporting standards for voluntary use

referred to in Article 29ca.’;

(7) Article 29c is deleted;

(8) the following Article 29ca is inserted:

‘Article 29ca

Sustainability reporting standards for voluntary use

1. To facilitate voluntary reporting of sustainability information by undertakings

other than those referred to in Articles 19a(1) and 29a(1), the Commission shall

adopt a delegated act by [4 months after entry into force of this Directive] in

accordance with Article 49 supplementing this Directive to provide for sustainability

reporting standards for voluntary use by such undertakings.

2. The sustainability reporting standards referred to in paragraph 1 shall be

proportionate to and relevant for the capacities and the characteristics of the

undertakings for which they are designed and to the scale and complexity of their

activities. They shall also, to the extent possible, specify the structure to be used to

present such sustainability information.’;

(9) Article 29d is replaced by the following:

‘Article 29d

Single electronic reporting format

1. Undertakings subject to the requirements of Article 19a of this Directive shall

prepare their management report in the electronic reporting format specified in

Article 3 of Commission Delegated Regulation (EU) 2019/815* and shall mark up

their sustainability reporting, including the disclosures provided for in Article 8 of

Regulation (EU) 2020/852, in accordance with the electronic reporting format to be

specified in that Delegated Regulation. Until such rules on the marking up are

adopted by way of that Delegated Regulation, undertakings shall not be required to

markup their sustainability reporting.

2. Parent undertakings subject to the requirements of Article 29a shall prepare

their consolidated management report in the electronic reporting format specified in

Article 3 of Delegated Regulation (EU) 2019/815 and shall mark up their

EN 35 EN

sustainability reporting, including the disclosures provided for in Article 8 of

Regulation (EU) 2020/852, in accordance with the electronic reporting format to be

specified in that Delegated Regulation. Until such rules on the marking up are

adopted by way of that Delegated Regulation, parent undertakings shall not be

required to markup their sustainability reporting.;

_____________________________________________

* Commission Delegated Regulation (EU) 2018/815 of 17 December 2018

supplementing Directive 2004/109/EC of the European Parliament and of the

Council with regard to regulatory technical standards on the specification of a single

electronic reporting format (OJ L 143, 29.5.2019, p. 1, ELI:

http://data.europa.eu/eli/reg_del/2019/815/oj).’;

(10) in Article 33, paragraph 1 is replaced by the following:

‘1. Member States shall ensure that the members of the administrative,

management and supervisory bodies of an undertaking, acting within the

competences assigned to them by national law, have collective responsibility for

ensuring that the following documents are drawn up and published in accordance

with the requirements of this Directive and, where applicable, with the international

accounting standards adopted pursuant to Regulation (EC) No 1606/2002, with

Delegated Regulation (EU) 2019/815, with the sustainability reporting standards

referred to in Article 29b of this Directive, and with the requirements of Article 29d

of this Directive:

(a) the annual financial statements, the management report and the corporate

governance statement when provided separately; and

(b) the consolidated financial statements, the consolidated management reports and

the consolidated corporate governance statement when provided separately.

By way of derogation from subparagraph 1, Member States shall ensure that the

members of the administrative, management and supervisory bodies of an

undertaking, acting within the competences assigned to them by national law, do not

have collective responsibility for ensuring that the management report, or

consolidated management report, where applicable, is prepared in accordance with

Article 29d.’;

(11) Article 34 is amended as follows:

(a) paragraph 1, second subparagraph, point (aa), is replaced by the following:

‘(aa) where applicable, express an opinion based on a limited assurance

engagement as regards the compliance of the sustainability reporting with

the requirements of this Directive, including the compliance of the

sustainability reporting with the sustainability reporting standards

adopted pursuant to Article 29b, the process carried out by the

undertaking to identify the information reported pursuant to those

sustainability reporting standards, and the compliance with the

requirement to mark up sustainability reporting in accordance with

Article 29d, and as regards the compliance with the reporting

requirements provided for in Article 8 of Regulation (EU) 2020/852;’;

(b) the following paragraph 2a is inserted:

EN 36 EN

‘2a. Member States shall ensure that the opinion referred to in paragraph 1,

second subparagraph, point (aa), is prepared in full respect of the obligation on

undertakings not to seek to obtain from undertakings in their value chain

which, on their balance sheet dates, do not exceed the average number of 1000

employees during the financial year any information that exceeds the

information specified in the standards for voluntary use referred to in Article

29ca, except for additional sustainability information that is commonly shared

between undertakings in the sector concerned.’;

(12) in Article 40a, paragraph 1 is amended as follows:

(a) the second subparagraph is replaced by the following:

‘The first subparagraph shall only apply to large subsidiary undertakings as

defined in Article 3(4) of this Directive’;

(b) the fourth and fifth subparagraphs are replaced by the following:

‘The rule referred to in the third subparagraph shall only apply to a branch

where the third-country undertaking does not have a subsidiary undertaking as

referred to in the first subparagraph, and where the branch generated a net

turnover exceeding the threshold referred to in Article 3(4) point (b) of this

Directive in the preceding financial year.

The first and third subparagraphs shall only apply to the subsidiary

undertakings or branches referred to in those subparagraphs where the third-

country undertaking, at its group level, or, if not applicable, the individual

level, generated a net turnover in the Union exceeding EUR 450 000 000 for

each of the last two consecutive financial years.’;

(13) Article 49 is amended as follows:

(a) the following paragraphs 3c to 3e are inserted:

‘3c. The power to adopt delegated acts referred to in Articles 19b(5),

29aa(5) and 29ca shall be conferred on the Commission for an indeterminate

period from [date of entry into force of amending Directive].

3d. The delegations of powers referred to in Articles 19b(5), 29aa(5) and

29ca may be revoked at any time by the European Parliament or by the

Council. A decision to revoke shall put an end to the delegation of the power

specified in that decision. It shall take effect the day following the publication

of the decision in the Official Journal of the European Union or at a later date

specified therein. It shall not affect the validity of any delegated acts already in

force.

3e. The Commission shall gather all necessary expertise, prior to the

adoption and during the development of delegated acts pursuant to Articles

19b(5) and 29aa(5), including through the consultation of the experts of the

Member State Expert Group on Sustainable Finance referred to in Article 24 of

Regulation (EU) 2020/852.’;

(b) paragraph 5 is replaced by the following:

‘5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article

19b, Article 29aa, Articles 29b, 29ca or 40b, or Article 46(2) shall enter into

force only if no objection has been expressed either by the European

Parliament or the Council within a period of two months of notification of that

EN 37 EN

act to the European Parliament and the Council or if, before the expiry of that

period, the European Parliament and the Council have both informed the

Commission that they will not object. That period shall be extended by two

months at the initiative of the European Parliament or the Council.’.

Article 3

Amendments to Directive (EU) 2022/2464

In Directive (EU) 2022/2464, Article 5(2) is amended as follows:

(1) the first subparagraph is amended as follows:

(a) point (a) is deleted;

(b) point (b) is amended as follows:

(i) point (i) is replaced by the following:

‘(i) to large undertakings which, on their balance sheet dates, exceed

the average number of 1000 employees during the financial year;’;

(ii) point (ii) is replaced by the following:

‘(ii) to parent undertakings of a large group which, on their balance

sheet dates, exceed the average number of 1000 employees, on a

consolidated basis, during the financial year;’;

(c) point (c) is deleted;

(2) the third subparagraph is amended as follows:

(a) point (a) is deleted;

(b) point (b) is amended as follows:

(i) point (i) is replaced by the following:

‘(i) to issuers as defined in Article 2(1), point (d) of Directive

2004/109/EC which are large undertakings within the meaning of

Article 3(4) of Directive 2013/34/EU which, on their balance sheet

dates, exceed the average number of 1000 employees during the

financial year;’;

(ii) point (ii) is replaced by the following:

‘(ii) to issuers as defined in Article 2(1), point (d) of Directive

2004/109/EC which are parent undertakings of a large group

which, on its balance sheet dates, exceed the average number of

1000 employees , on a consolidated basis, during the financial

year;’;

(c) point (c) is deleted.

Article 4

Amendments to Directive (EU) 2024/1760

Directive (EU) 2024/1760 is amended as follows:

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(1) in Article 1(1), point (c) is replaced by the following:

‘(c) the obligation for companies to adopt a transition plan for climate change

mitigation, including implementing actions which aim to ensure, through best

efforts, compatibility of the business model and of the strategy of the company

with the transition to a sustainable economy and with the limiting of global

warming to 1,5 oC in line with the Paris Agreement.’;

(2) in Article 3(1), point (n) is replaced by the following:

‘(n) ‘stakeholders’ means the company’s employees, the employees of its

subsidiaries and of its business partners, and their trade unions and workers’

representatives, and individuals or communities whose rights or interests are or

could be directly affected by the products, services and operations of the

company, its subsidiaries and its business partners and the legitimate

representatives of those individuals or communities;’;

(3) Article 4 is replaced by the following:

‘Article 4

Level of harmonisation

1. Without prejudice to Article 1(2) and (3), Member States shall not introduce,

in their national law, provisions within the field covered by this Directive laying

down human rights and environmental due diligence obligations diverging from

those laid down in Articles 6 and 8, Article 10(1) to (5), Article 11(1) to (6) and

Article 14.

2. Notwithstanding paragraph 1, this Directive shall not preclude Member States

from introducing, in their national law, more stringent provisions diverging from

those laid down in provisions other than Articles 6 and, 8, Article 10(1) to (5),

Article 11(1) to (6) and Article 14, or provisions that are more specific in terms of

the objective or the field covered, including by regulating specific products, services

or situations, in order to achieve a different level of protection of human,

employment and social rights, the environment or the climate.’;

(4) Article 8 is amended as follows:

(a) in paragraph 2, point (b) is replaced by the following:

‘(b) based on the results of the mapping as referred to in point (a), carry out

and in-depth assessment of their own operations, those of their

subsidiaries and, where related to their chains of activities, those of their

direct business partners, in the areas where adverse impacts were

identified to be most likely to occur and most severe.’;

(b) the following paragraph 2a is inserted:

‘2a. Where a company has plausible information that suggests that adverse

impacts at the level of the operations of an indirect business partner have arisen

or may arise, it shall carry out an in-depth assessment. The company shall

always carry out such an assessment where the indirect, rather than direct,

nature of the relationship with the business partner is the result of an artificial

arrangement that does not reflect economic reality but points to a

circumvention of paragraph 2, point (b). Where the assessment confirms the

EN 39 EN

likelihood or existence of the adverse impact, it is deemed to have been

identified.

The first subparagraph is without prejudice to the company considering

available information about indirect business partners and whether those

business partners can follow the rules and principles set out in the company’s

code of conduct when selecting a direct business partner.

Notwithstanding the first subparagraph, irrespective of whether plausible

information is available about indirect business partners, a company shall seek

contractual assurances from a direct business partner that that business partner

will ensure compliance with the company’s code of conduct by establishing

corresponding contractual assurances from its business partners. Article 10(2),

points (b) and (e) shall apply accordingly.’;

(c) paragraph 4 is replaced by the following:

‘4. Where information necessary for the in-depth assessment provided for

in paragraph 2, point (b), and in paragraph 2a can be obtained from different

business partners, the company shall prioritise requesting such information,

where reasonable, directly from the business partner or partners where the

adverse impacts are most likely to occur.’;

(d) the following paragraph 5 is added:

‘5. Member States shall ensure that, for the mapping provided for in

paragraph 2, point (a), companies do not seek to obtain information from direct

business partners with fewer than 500 employees that exceeds the information

specified in the standards for voluntary use referred to in Article 29a of

Directive 2013/34/EU.

By way of derogation to the first sub-paragraph, where additional information

is necessary for the mapping provided for in paragraph 2, point (a), in light of

indications of likely adverse impacts or because the standards do not cover

relevant impacts, and where such additional information cannot reasonably be

obtained by other means, the company may seek such information from that

business partner.’;

(5) in Article 10, paragraph 6 is replaced by the following:

‘6. As regards potential adverse impacts as referred to in paragraph 1 that could

not be prevented or adequately mitigated by the measures set out in paragraphs 2, 4

and 5, the company shall, as a last resort:

(a) refrain from entering into new, or extending existing, relations with a business

partner in connection with which, or in the chain of activities of which, the

impact has arisen,

(b) where the law governing its relation with the business partner concerned so

entitles it, adopt and implement an enhanced prevention action plan for the

specific adverse impact without undue delay, provided that there is a

reasonable expectation that those efforts will succeed, and

(c) use or increase its leverage through the suspension of the business relationship

with respect to the activities concerned.

EN 40 EN

As long as there is a reasonable expectation that the enhanced prevention action plan

will succeed, the mere fact of continuing to engage with the business partner shall

not trigger the company’s liability.

Prior to suspending a business relationship, the company shall assess whether the

adverse impacts from doing so can be reasonably expected to be manifestly more

severe than the adverse impact that could not be prevented or adequately mitigated.

Should that be the case, the company shall not be required to suspend the business

relationship and shall be in a position to report to the competent supervisory

authority about the duly justified reasons for such decision.

Member States shall provide for an option to suspend the business relationship in

contracts governed by their laws in accordance with the first subparagraph, except

for contracts where the parties are obliged by law to enter into them.

Where the company decides to suspend the business relationship, it shall take steps

to prevent, mitigate or bring to an end the impacts of the suspension, shall provide

reasonable notice to the business partner concerned and shall keep that decision

under review.

Where the company decides not to suspend the business relationship pursuant to this

Article, it shall monitor the potential adverse impact and periodically assess its

decision and whether further appropriate measures are available.’;

(6) in Article 11, paragraph 7 is replaced by the following:

‘7. As regards actual adverse impacts as referred to in paragraph 1 that could not

be prevented or adequately mitigated by the measures set out in paragraphs 3, 5 and

6, the company shall, as a last resort:

(a) refrain from entering into new, or extending existing, relations with a business

partner in connection with which, or in the chain of activities of which, the

impact has arisen,

(b) where the law governing its relation with the business partner concerned so

entitles it, adopt and implement an enhanced prevention action plan for the

specific adverse impact without undue delay, provided that there is a

reasonable expectation that those efforts will succeed, and

(c) use or increase its leverage through the suspension of the business relationship

with respect to the activities concerned.

As long as there is a reasonable expectation that the enhanced prevention action plan

will succeed, the mere fact of continuing to engage with the business partner shall

not trigger the company’s liability.

Prior to suspending a business relationship, the company shall assess whether the

adverse impacts from doing so can be reasonably expected to be manifestly more

severe than the adverse impact that could not be prevented or adequately mitigated.

Should that be the case, the company shall not be required to suspend the business

relationship and shall be in a position to report to the competent supervisory

authority about the duly justified reasons for such decision.

Member States shall provide for an option to suspend the business relationship in

contracts governed by their laws in accordance with the first subparagraph, except

for contracts where the parties are obliged by law to enter into them.

EN 41 EN

Where the company decides to suspend the business relationship, it shall take steps

to prevent, mitigate or bring to an end the impacts of the suspension, shall provide

reasonable notice to the business partner concerned and shall keep that decision

under review.

Where the company decides not to suspend the business relationship pursuant to this

Article, it shall monitor the potential adverse impact and periodically assess its

decision and whether further appropriate measures are available.’;

(7) in Article 13, paragraph 3 is amended as follows:

(a) the introductory wording is replaced by the following:

‘Consultation of relevant stakeholders shall take place at the following stages

of the due diligence process:’;

(b) points (c) and (e) are deleted;

(8) in Article 15, the second sentence is replaced by the following:

‘Such assessments shall be based, where appropriate, on qualitative and quantitative

indicators and be carried out without undue delay after a significant change occurs,

but at least every 5 years and whenever there are reasonable grounds to believe that

the measures are no longer adequate or effective or that new risks of the occurrence

of those adverse impacts may arise.’;

(9) in Article 19, paragraph 3 is replaced by the following:

‘3. The guidelines referred to in paragraph 2, point (a), shall be made available by

26 July 2026, those referred to in paragraph 2, points (d) and (e), by 26 January

2027, and those referred to in paragraph 2, points (b), (f) and (g), by 26 July 2027.’;

(10) in Article 22(1), the first subparagraph is replaced by the following:

‘Member States shall ensure that companies referred to in Article 2(1), points (a), (b)

and (c), and Article 2(2), points (a), (b) and (c), adopt a transition plan for climate

change mitigation, including implementing actions, which aim to ensure, through

best efforts, that the business model and strategy of the company are compatible with

the transition to a sustainable economy and with the limiting of global warming to

1.5°C in line with the Paris Agreement and the objective of achieving climate

neutrality as established in Regulation (EU) 2021/1119, including its intermediate

and 2050 climate neutrality targets, and where relevant, the exposure of the company

to coal-, oil- and gas-related activities.’;

(11) in Article 27, paragraph 4 is replaced by the following:

‘4. The Commission, in collaboration with Member States, shall issue guidance to

assist supervisory authorities in determining the level of penalties in accordance with

this Article. Member States shall not set a maximum limit of pecuniary penalties in

their national law transposing this Directive that would prevent supervisory

authorities from imposing penalties in accordance with the principles and factors set

out in paragraphs 1 and 2.’;

(12) Article 29 is amended as follows:

(a) paragraph 1 is deleted;

(b) paragraph 2 is replaced by the following:

EN 42 EN

‘2. Where a company is held liable pursuant to national law for damage

caused to a natural or legal person by a failure to comply with the due diligence

requirements under this Directive, Member States shall ensure that those

persons have a right to full compensation. Full compensation shall not lead to

overcompensation, whether by means of punitive, multiple or other types of

damages.’;

(c) in paragraph 3, point (d) is deleted;

(d) paragraph 4 is replaced by the following:

‘4. Companies that have participated in industry or multi-stakeholder

initiatives, or used independent third-party verification or contractual clauses to

support the implementation of due diligence obligations may nevertheless be

held liable in accordance with national law.’;

(e) in paragraph 5, the first subparagraph is replaced by the following:

‘The civil liability of a company for damages as referred to in this Article shall

be without prejudice to the civil liability of its subsidiaries or of any direct and

indirect business partners in the chain of activities of the company.’;

(f) paragraph 7 is deleted;

(13) in Article 36, paragraph 1 is deleted.

Article 5

Transposition

1. Member States shall bring into force the laws, regulations and administrative

provisions necessary to comply with this Directive by [12 months after entry into force] at the

latest. They shall forthwith communicate to the Commission the text of those provisions.

When Member States adopt those provisions, they shall contain a reference to this Directive

or be accompanied by such a reference on the occasion of their official publication. Member

States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions

of national law which they adopt in the field covered by this Directive.

Article 6

Entry into force

This Directive shall enter into force on the twentieth day following that of its publication in

the Official Journal of the European Union.

EN 43 EN

Article 7

Addressees

This Directive is addressed to the Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

EN 1 EN

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

1. CONTEXT OF THE PROPOSAL ............................................................................... 1

• Reasons for and objectives of the proposal .................................................................. 1

• Consistency with existing policy provisions in the policy area ................................... 7

• Consistency with other Union policies ........................................................................ 8

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY ............................... 9

• Legal basis .................................................................................................................... 9

• Subsidiarity (for non-exclusive competence)............................................................... 9

• Proportionality ............................................................................................................. 9

• Choice of the instrument ............................................................................................ 10

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS

AND IMPACT ASSESSMENTS .............................................................................. 10

• Ex-post evaluations/fitness checks of existing legislation ......................................... 10

• Stakeholder consultations .......................................................................................... 10

• Collection and use of expertise .................................................................................. 12

• Impact assessment ...................................................................................................... 12

• Regulatory fitness and simplification ........................................................................ 13

• Fundamental rights ..................................................................................................... 13

4. BUDGETARY IMPLICATIONS .............................................................................. 14

5. OTHER ELEMENTS ................................................................................................ 14

• Implementation plans and monitoring, evaluation and reporting arrangements ........ 14

• Explanatory documents (for directives) ..................................................................... 14

• Detailed explanation of the specific provisions of the proposal ................................ 14

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3

1.1. Title of the proposal/initiative ...................................................................................... 3

1.2. Policy area(s) concerned .............................................................................................. 3

1.3. Objective(s) .................................................................................................................. 3

1.3.1. General objective(s) ..................................................................................................... 3

1.3.2. Specific objective(s) ..................................................................................................... 3

1.3.3. Expected result(s) and impact ...................................................................................... 4

1.3.4. Indicators of performance ............................................................................................ 4

1.4. The proposal/initiative relates to: ................................................................................. 5

1.5. Grounds for the proposal/initiative .............................................................................. 5

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative ............................................................ 5

EN 2 EN

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone. ................................................................................. 6

1.5.3. Lessons learned from similar experiences in the past .................................................. 6

1.5.4. Compatibility with the multiannual financial framework and possible synergies with

other appropriate instruments ....................................................................................... 6

1.5.5. Assessment of the different available financing options, including scope for

redeployment ................................................................................................................ 6

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE .............. 7

3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s)

affected ......................................................................................................................... 7

4. DIGITAL DIMENSIONS ............................................................................................ 7

4.1. Requirements of digital relevance ................................................................................ 7

4.2. Data .............................................................................................................................. 8

4.3. Digital solutions ........................................................................................................... 8

4.4. Interoperability assessment .......................................................................................... 8

4.5. Measures to support digital implementation ................................................................ 8

EN 3 EN

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1. Title of the proposal/initiative

Proposal for a Directive of the European Parliament and of the Council amending

Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as

regards certain corporate sustainability reporting and due diligence requirements for

undertakings.

1.2. Policy area(s) concerned

Capital Markets Union, Savings and Investment Union, European Green Deal,

Sustainable Finance Strategy, Company law and corporate governance.

1.3. Objective(s)

1.3.1. General objective(s)

The general objectives pursued by this legislative proposal are to simplify and reduce

certain elements of Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU)

2024/1760 in order to alleviate the reporting and due diligence burden on companies

in scope of the requirements.

By reducing the administrative burden associated with reporting requirements and

the compliance costs of sustainability due diligence stemming from the above

legislation, this proposal intends to enhance the proportionality of the framework and

the competitiveness of European companies, while also maintaining the objectives of

the European Green Deal.

1.3.2. Specific objective(s)

The specific objectives of the proposed amendments to Directive 2013/34/EU

included in this proposal aim to achieve the following results:

– Reduce the number of companies which fall within the scope of the

sustainability reporting requirements to large companies with more than 1000

employees.

– Reduce trickle-down effects on SMEs and smaller large companies by

imposing the voluntary sustainability reporting standard for SMEs (VSME) as

the value chain cap for all companies not subject to sustainability reporting

requirements.

– Provide for a proportionate standard for voluntary use by companies which are

not subject to sustainability reporting requirements.

– Remove the empowerment for the Commission to adopt sector-specific

sustainability reporting standards.

The specific objectives of the proposed amendments to Directive 2006/43/EC

included in this proposal aim to achieve the following results:

– Delete the obligation for the Commission to adopt standards for sustainability

assurance by October 2026. The Commission will issue targeted assurance

guidelines by 2026.

The specific objectives of the proposed amendments to Directive (EU) 2022/2464

included in this proposal aim to achieve the following results:

EN 4 EN

– Reflect the reduction of the undertakings in scope of sustainability reporting

under Articles 19a and 29a of the Accounting Directive in the relevant

provision specifying the application dates for sustainability reporting rules.

The specific objectives of the proposed amendments to Directive (EU) 2024/1760

included in this proposal aim to achieve the following results:

– Simplify selected due diligence requirements in order to avoid unnecessary

complexities and costs for the large companies under the scope.

– Reduce further the trickle-down effects on SMEs and small midcap companies

(SMCs) in the value chains of large companies in scope by limiting

information requests.

1.3.3. Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

The expected results and impact of the proposed amendments are to simplify

sustainability reporting requirements and as a result reduce the administrative burden

on companies in this regard, whilst maintaining the objectives of the European Green

Deal and the Sustainable Finance Action Plan. The proposed amendments are also

expected to result in significant cost savings for companies in scope when carrying

out sustainability reporting. In the same vein, the amendments to the human rights

and environmental due diligence requirements are expected to simplify related

corporate processes and procedures as compared to the Directive as in force (which

is not yet transposed or applied).

1.3.4. Indicators of performance

Specify the indicators for monitoring progress and achievements.

The CSRD has been applied by a first set of companies who are publishing their first

sustainability statements mainly in the first half of 2025. It has therefore not been

possible to undertake an ex-post evaluation or fitness check of either piece of

legislation.

To monitor progress towards achieving the proposal’s specific objectives, the

Commission will explore the possibility of organising exchanges with stakeholders

in different formats as well as periodic surveys of users of sustainability information

and of undertakings that report such information, depending on the availability of

financial resources. Article 6 of the CSRD requires the Commission to present a

report on the implementation of the Directive by April 2029.

In this proposal, the Commission also commits to revising the first set of ESRS.

Under Directive 2013/34/EU, the Commission is required to review those

sustainability reporting standards, including the sustainability reporting standards for

small and medium-sized undertakings, every three years to take account of relevant

developments, including the development of international standards.

The implementation of the CSDDD as amended, and its effectiveness in reaching its

objectives, in particular in addressing adverse impacts, will also be subject to regular

evaluation according to Article 36 of that Directive.

A number of indicators will be used to monitor the progress of these proposals, such

as the effectiveness and timeliness of the actions proposed, the efficiency of

processes for collecting and processing data in accordance with the sustainability

EN 5 EN

reporting requirements, and the objective to limit administrative burden and avoid

unnecessary or duplicative reporting requirements.

Under Article 36 of the CSDDD, the Commission will submit, by 26 July 2030, a

report to the European Parliament and to the Council on the implementation of this

Directive and its effectiveness in reaching its objectives, in particular in addressing

adverse impacts. It will cover, among others, the impacts of this Directive on SMEs,

the scope of this Directive in terms of the companies covered, the definition of the

term ‘chain of activities’; the Annex, including whether it should be extended to

cover additional adverse impacts; the rules on combatting climate change; the

effectiveness of the enforcement mechanisms, penalties and the rules on civil

liability; the level of harmonisation, including convergence and divergence between

provisions of national law transposing this Directive.

1.4. The proposal/initiative relates to:

 a new action

 a new action following a pilot project / preparatory action33

 the extension of an existing action

 a merger or redirection of one or more actions towards another/a new action

1.5. Grounds for the proposal/initiative

1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for

roll-out of the implementation of the initiative

With this proposal, the Commission proposes a Directive amending a number of

provisions of Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464, and (EU)

2024/1760. Once the co-legislators have reached an agreement on the contents of the

proposal, the Member States will have a certain period of time to transpose the

amendments introduced by this Directive into their national law.

In a separate legislative proposal, the Commission proposes to postpone the

application of the sustainability reporting requirements in Directive 2013/34/EU for a

period of two years for all large companies and listed SMEs – including non-EU

issuers that meet these size thresholds - currently in scope and required to comply

with sustainability reporting rules from financial year 2025 onwards. In the same

proposal, the Commission also proposes to delay, by one year, the transposition

deadline (to 26 July 2027) and the first wave of application (26 July 2028) of the

sustainability due diligence rules set out in Directive 2024/1760.

The Commission also proposes to revise Commission Delegated Regulation (EU)

2023/2772 (European Sustainability Reporting Standards). The Commission will

adopt the revised ESRS delegated act in time for those undertakings in the second

wave that would be required to start reporting under the CSRD in 2028 for financial

year 2027 to apply the revised standards.

To monitor progress towards achieving the proposal’s specific objectives, the

Commission will explore the possibility of organising exchanges with stakeholders

in different formats as well as periodic surveys of users of sustainability information

and of undertakings that report such information, depending on the availability of

33 As referred to in Article 58(2), point (a) or (b) of the Financial Regulation.

EN 6 EN

financial resources. Article 6 of the CSRD requires the Commission to present a

report on the implementation if the Directive by April 2029. The implementation of

the CSDDD as amended, and its effectiveness in reaching its objectives, in particular

in addressing adverse impacts, will also be subject to regular evaluation according to

Article 36 of that Directive. This proposal does not require an implementation plan.

1.5.2. Added value of EU involvement (it may result from different factors, e.g.

coordination gains, legal certainty, greater effectiveness or complementarities). For

the purposes of this section 'added value of EU involvement' is the value resulting

from EU action, that is additional to the value that would have been otherwise

created by Member States alone.

The Accounting Directive, as amended by the CSRD, already regulates the

disclosure of sustainability information in the EU. Common rules on sustainability

reporting and its assurance ensure a level playing field for companies established in

the different Member States. Significant differences in requirements for

sustainability reporting and assurance between Member States would create

additional costs and complexity for companies operating across borders, which

would be detrimental to the single market. Member States acting alone are not able to

modify existing EU laws to reduce the burden on companies.

Similarly, the CSDDD already sets out a harmonised regulatory framework for

corporate sustainability due diligence, and also covers certain third-country

companies active in the EU market, ensuring level playing field in this policy area.

1.5.3. Lessons learned from similar experiences in the past

N/A

1.5.4. Compatibility with the multiannual financial framework and possible synergies with

other appropriate instruments

N/A

1.5.5. Assessment of the different available financing options, including scope for

redeployment

N/A

EN 7 EN

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1. Heading(s) of the multiannual financial framework and expenditure budget

line(s) affected

4. DIGITAL DIMENSIONS

4.1. Requirements of digital relevance

The reporting requirements introduced by Directive 2013/34/EU require companies to

collect and report data concerning their impacts, risks and opportunities as regards material

sustainability matters. This exercise entails significant data identification, collection,

processing, verification and publication. In order to collect the relevant data, undertakings

often use digital data collection and data sharing platforms. Additionally, in order to store

and process the data for the purposes of sustainability reporting companies also often utilise

digital data management tools.

Users of sustainability information increasingly expect such information to be accessible,

comparable and machine-readable in digital formats. Member States must require that

undertakings subject to the sustainability reporting requirements of Directive 2013/34/EU

make their management reports available on their websites, free of charge to the public.

Digitalisation creates opportunities to exploit information more efficiently and holds the

potential for significant cost savings for both users and undertakings. Digitalisation also

enables the centralisation at Union and Member State level of data in an open and

accessible format that facilitates reading and allows for the comparison of data. These

requirements also complement the creation of a European single access point (ESAP) for

public corporate information.

As regards specific requirements within the Directive which are of digital relevance, please

see below.

Directive 2013/34/EU requires undertakings subject to sustainability reporting to prepare

their management report in the electronic reporting format specified in Article 3 of

Commission Delegated Regulation (EU) 2019/815 (ESEF Delegated Regulation). It also

requires these undertakings to mark up their sustainability reporting, including the

disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with the

digital taxonomy to be adopted by the Commission by way of an amendment to the ESEF

Delegated Regulation.

A digital taxonomy for the Union sustainability reporting standards will allow sustainability

reporting to be tagged and to be machine-readable. Until the adoption of this digital

taxonomy, undertakings are not required to mark-up their sustainability statements.

Considering that the sustainability statement will become machine-readable only once it is

both included in an XHTML document and marked-up with a digital taxonomy, pending

the adoption of the digital taxonomy undertakings are also not required to prepare the

management report in XHTML.

Stakeholders affected by these requirements include undertakings required to prepare and

publish a sustainability statement which has been digitally tagged and provided in an

XHTML format, as well as assurance providers who must verify that the sustainability

statement meets the necessary requirements.

N/A

EN 8 EN

The current proposal does not modify the existing digital tagging or format rules introduced

by the CSRD, which will enhance digital reporting and enable the use of artificial

intelligence in utilising the information that undertakings report.

As regards the CSDDD, digital tools and technologies, such as those used for tracking,

surveillance or tracing raw materials, goods and products throughout value chains, for

instance satellites, drones, radars, or platform-based solutions, could support and reduce the

cost of data gathering for value chain management, including the identification and

assessment of adverse impacts, prevention and mitigation, and monitoring of the

effectiveness of due diligence measures.

4.2. Data

See section above.

4.3. Digital solutions

4.4. Interoperability assessment

4.5. Measures to support digital implementation

See section above.

N/A

To facilitate the smooth implementation of the requirements of digital relevance identified

in Section 4.1., the Commission is involved in a number of initiatives.

Firstly, a digital taxonomy for the Union sustainability reporting standards will be

necessary to allow the reported information to be tagged in accordance with those

sustainability reporting standards. The Commission will adopt a digital taxonomy for the

tagging of sustainability information via a Delegated Act, after having received technical

advice from ESMA.

Secondly, in the framework of the 2025 Technical Support Instrument round, the

Commission intends to launch a flagship multi-country project entitled "Improving

Sustainability Reporting for Businesses." This initiative aims to enhance the capacity of

Member States to support companies, particularly SMEs, in implementing CSRD and EU

Taxonomy reporting requirements. The support under this initiative will take into account

the evolution of the reporting requirements, and it will also be relevant for non-listed SMEs

that are not subject to mandatory reporting but face growing demands for sustainability

information from their financial and value chain partners.

Thirdly, EFRAG has launched an SME forum in which they bring together relevant

stakeholders of the SME community to discuss the implementation of the sustainability

reporting requirements and how digital solutions and tools can be used to facilitate

sustainability reporting for SMEs.

As regards the CSDDD, in order to help companies fulfil their due diligence obligations

along their value chain, the Directive encourages the use of digital tools and technologies

and requires the Commission to issue guidelines with useful information and references to

appropriate resources. When using digital tools and technologies, companies should take

into account and appropriately address possible risks associated therewith, and put in place

mechanisms to verify the appropriateness of the information obtained.

Suur-Ameerika 1 / 10122 Tallinn / +372 620 8100 / [email protected]/ www.justdigi.ee Registrikood 70000898

Huvigrupid Ministeeriumid Üleskutse arvamuse avaldamiseks äriühingute kestlikkusalase hoolsuskohustuse direktiivi (CSDDD) muutmise menetluses

Austatud huvigrupid ja ministeeriumid

Euroopa Komisjon algatas 26.veebruaril 2025 Omnibus I paketiga mitu eelnõu, millega soovitakse

vähendada ettevõtete kestlikkusalase regulatsiooniga seotud halduskoormust (nn Omnibus I pakett).

Paketi osana on tehtud muudatusettepanekud ka 24.juulil 2024 jõustunud ettevõtete kestlikkusalase

hoolsuskohustuse direktiivi (edaspidi ka direktiiv või CSDDD) kohta. Muudatusettepanekute

eesmärk on CSDDD sisu lihtsustada, et hõlbustada selle rakendamist liikmesriikides ja vähendada

hoolsuskohustuse täitmisega kaasnevat halduskoormust ettevõtetele. Liikmesriikides, sh Eestis ei ole

direktiivi veel siseriiklikku õigusesse üle võetud.

CSDDD muudatuste arutamiseks on loodud Euroopa Liidu (EL) tasandil töögrupid, kus liikmesriikidel

on võimalus muudatuste kohta seisukohti väljendada. Soovime kaasata valdkonnaga seotud

huvigrupid ja ministeeriumid Vabariigi Valitsuse seisukohtade kujundamisse, mille alusel saab

Eesti töögrupis CSDDD sisu muutmise asjus kaasa rääkida. Kaasame CSDDD muutmise

menetlemisse samad huvigrupid, kes rääkisid kaasa algse direktiivi menetluses.

Kuna Omnibus I eelnõude menetlemine toimub EL tasandil kiirendatud korras, jääb erinevate

huvigruppide kaasamiseks aega napilt. Oleme tänulikud, kui leiate võimaluse tavapärasest

oluliselt lühema ajaga anda tagasisidet direktiivi kavandatavate muudatuste ja nende mõju

kohta.

Toome allpool ära plaanitavate muudatuste loetelu koos lühikese selgitusega ja iga muudatuse lõppu

on allajoonituna lisatud viide kirjaga kaasas olevatele failidee, kust konkreetset muudatust soovi

korral vaadata saab. Palun pange tähele, et loetelu esimene muudatus kajastub algatuse failis

numbriga 80 (rakendamise kuupäevad), kõik ülejäänud muudatused on leitavad algatuse failist

numbriga 81 (CSRD ja CSDDD nõuded). Mõlemad failid on kirjale lisatud.

Võrreldes 24. juulil 2024 jõustunud CSDDD sisuga on Euroopa Komisjon teinud ettepanekud muuta

direktiivi sätteid järgmiselt:

1) lükata ühe aasta võrra edasi CSDDD siseriiklikku õigusesse ülevõtmise tähtpäeva.

Kehtiva direktiivi järgi tuleks see siseriiklikku õigusse üle võtta 26. juuliks 2026, muudatuse

järgselt lükkuks ülevõtmise tähtpäev 26. juulile 2027. Sellega koos lükkuks aasta võrra edasi

ka hoolsuskohustuse nõuete kavandatud järkjärguline rakendamine ettevõtetele, mis toimuks

vastavalt:

- 2028. aastal rakenduks hoolsuskohustuse nõuded vähemalt 3000 töötaja ja

900 000 000 miljoni suuruse aastakäibega ettevõtetele ja sama suure käibega EL-

välistele ettevõtetele.

Meie 10.03.2025 nr 7-1/2352

- 2029. aastal kohalduks hoolsuskohustus kõikidele ettevõtetele, kus on vähemalt 1000

töötajat ning vähemalt 450 000 000 euro suurune aastakäive.

Samal ajal kiirendab Euroopa Komisjon oma juhiste väljatöötamist, et need jõuaks valmida

enne kui nõuded ettevõtetele praktikas kohalduma hakkavad. Vt algatuse nr 80 artikkel 2, lk

4;

2) täielikule ühtlustamisele (maximum harmonisation) kuuluvate nõuete ringi laiendatakse

(CSDDD artikkel 4). Kui senine artikli 4 sõnastus nägi ette täieliku ühtlustamise artiklite 8

(kahjulike mõjude kaardistamine), 10 (võimaliku kahjuliku mõju ennetamine) ja 11 (tegeliku

kahjuliku mõju lõpetamine) osas, siis nüüd laieneb täieliku ühtlustamise nõue ka artiklitele 6

(hoolsuskohustuse täitmise toetamine kontserni tasandil) ja 14 (teavitamise mehhanism ja

kaebuste esitamise kord). Seejuures on Komisjon märkinud, et sellest ettepanekust

kaugemale ei oleks mõistlik täieliku ühtlustamisega minna, sest siis satuks ohtu liikmesriikides

kehtivad ja just nende olusid arvestavad keskkonna ja inimõiguste alased standardid, seetõttu

peab liikmesriikidele jääma direktiivi rakendamisel paindlikkust. Vt algatuse nr 81 artikkel 4,

alapunkt (3), lk 38);

3) hoolsuskohustuse raames seatav kohustus hinnata põhjalikult oma äripartnerite

protsesside potentsiaalseid riske piirdub üksnes tegevuste ahelasse kuuluvate otseste

äripartneritega (CSDDD artikkel 8 (b)). Senine nõue näeb ette kõikide tegevusahelasse

jäävate (st otseste ja kaudsete) äripartnerite hindamist. Muudatus tähendab, et tegevuste

ahelasse jäävate kaudsete äripartnerite puhul kohustub ettevõtja põhjaliku hindamise läbi

viima üksnes siis, kui tal on usutavat infot võimalike kahjulike mõjude esinemise kohta nende

tegevuses. Selline muudatus vähendaks hoolsuskohustusega ettevõtte halduskoormust mh

ka selle kaudu, et paneb kaudsetele äripartneritele (kelleks sageli on väikese või keskmisega

suurused ettevõtted) rohkem vastutust oma tegevuses juba omal algatusel vastutustundliku

ettevõtluse suuniseid järgida. Vt algatuse nr 81 artikkel 4, alapunkt (4)(a) ja (b), lk 38);

4) piiratakse info hulka, mida hoolsuskohustusega ettevõttel on õigus oma äripartneritelt

kahjulike mõjude kaardistamise käigus küsida. Senine päritava info ulatus ei olnud selgelt

piiritletud. Muudatusega jääks ettevõttele õigus küsida äripartneritelt vaid seda teavet, mis on

loetletud kestlikkuse aruandluse direktiivi 2022/2464 (CSRD) artiklis 29a. Vt algatuse nr 81

artikkel 4, alapunkt (4)(d), lk 39;

5) eemaldatakse kohustus rakendada kahjuliku tegevusega äripartneri suhtes nn viimase

abinõuna ärisuhte peatamise meedet (CSDDD artikkel 10 (6) ja 11 (7)). See meede on

praegu mõeldud rakendamiseks siis, kui ükski muu hoolsuskohustuse meede ei ole mõju

avaldanud ning äripartneri tegevusest tekkiv kahju on tõsine. Meetme kaotamine võib

vähendada halduskoormust olukorras, kus on teada, et äripartner oma kahjuliku mõju lõpuks

maandab, sest siis saab jätta ärisuhte puutumata ja kaob vajadus hakata vahepealseks ajaks

(kuni kahjuliku mõju kõrvaldamiseni) otsima alternatiivseid tarnijad. Vt algatuse nr 81 artikkel

4, alapunkt (5) ja (6), lk 39-41);

6) lihtsustatakse „huvirühmade“ mõistet (CSDDD artikkel 3 (1)), mille alla jäävad kuuluma

töötajad, nende esindajad ja isikud ning kogukonnad, kelle huve või õigusi ettevõtte

tegevus vahetult/otseselt rikub. Senine mõiste on oluliselt laiem ja see muudab võimalike

kahju kannatajate ringi prognoosimatult laiaks, muudetud sõnastus piiritleb huvirühmade

koosseisu selgemalt. Muudatuse raames lisataks direktiivi ka selgitav täiendus, et ettevõtted

peavad kaasama üksnes need huvigrupid, kes on konkreetses etapis asjakohased, st puudub

kohustus kaasata igal ajal kõikmõeldavaid huvigruppe (artikkel 13). Vt algatuse nr 81 artikkel

4, alapunkt (2) ja (7), lk 38 ja 41;

7) hoolsuskohustuse täitmise hindamise ning protsesside uuendamise sagedus muutub

iga-aastasest kohustusest iga viie aasta tagant täidetavaks kohustuseks (CSDDD

artikkel 15). Siiski tuleb meetmed ja protsessid ka vahepealsel ajal viivitamata üle hinnata siis,

kui ettevõtte tegevuses toimuvad olulised muudatused. Vt algatuse nr 81 artikkel 4, alapunkt

(8), lk 41;

8) kaob kohustus täita (to put into effect) kliimamuutuste leevendamise üleminekukava

(CSDDD artikkel 1 (c)). Senine sõnastus kohustab otsesõnu ettevõtet seda kava vastu võtma

ja täitma. Muudatusega säiliks kohustus see plaan vastu võtta, kuid täitmise kohustuse asemel

sõnastatakse sättes kohustus näha kavas ette konkreetsed rakendamistegevused (sarnaselt

CSRD sõnastusega). Vt algatuse nr 81 artikkel 4, alapunkt (1), lk 38;

9) eemaldatakse rikkumiste eest määratavate rahaliste karistuste 5%-line ülemmäär

(CSDDD artikkel 27 (4)). Selle asemel sätestatakse, et Euroopa Komisjon koostab juhise, mis

aitaks liikmesriikide järelevalveasutustel direktiivi põhimõtetele vastavaid karistusi määrata. Vt

algatuse nr 81 artikkel 4, alapunkt (11), lk 41;

10) eemaldatakse EL tasandi tsiviilvastutuse eriregulatsioon (CSDDD artikkel 29). Senine

eriregulatsioon oleks ülimuslik liikmesriigi enda tsiviilõiguse ees. Muudatusega kohalduks

rikkumise ja kahju tekitamise korral siiski liikmesriigi siseriiklik tsiviilõigus. Lisaks

eemaldatakse kollektiivhagide esitamise võimalus (CSDDD artikkel 29 (3) (d)) ja säte, mis

muudaks CSDDD tsiviilvastutuse normide kohaldamise kohustuslikuks siis, kui liikmesriigi

õigus kahjunõudele ei kohaldu (CSDDD artikkel 29 (7)). Vt algatuse nr 81 artikkel 4, alapunkt

(12), lk 41-42;

11) eemaldatakse klausel, mille kohaselt kohustub Euroopa Komisjon enne juulit 2026

esitama aruande vajaduse kohta kehtestada täiendavad hoolsuskohustuse nõuded

finantsettevõtjatele (artikkel 36 (1)). Konkreetse tähtajaga klausli eemaldamine ei välista

Komisjoni õigust vajadusel täiendava regulatsiooni ettepanek teha, kuid CSDDDst kaob

otsene tähtajaline kohustus selleks. Vt algatuse nr 81 artikkel 4, alapunkt (13), lk 42.

Ootame kaasatud huvigruppidelt ja ministeeriumitelt muudatusettepanekute kohta tagasisidet hiljemalt 17.03.2025. Tagasiside palume saata Justiits- ja Digiministeeriumi e-posti aadressile [email protected] ning koopiana õiguspoliitika osakonna nõuniku Kadi Karuse e-posti aadressile [email protected]. Kiirendatud protsessi tõttu on seisukohtade esitamise aeg küll väga lühike, kuid oleme tänulikud iga tagasiside eest, mis aitab ettepanekute suhtes sisulisi positsioone kujundada. Lugupidamisega (allkirjastatud digitaalselt) Heddi Lutterus Asekantsler Lisad: Lisa 1 Algatus nr 80 (rakendamise kuupäevad) Lisa 2 Algatus nr 81 (CSRD ja CSDDD nõuded) Adressaadid:Eesti Kaubandus-Tööstuskoda MTÜ Roheline Liikumine Eesti Betooniühing Eesti Rõiva- ja Tekstiililiit Eesti Tööandjate Keskliit Ettevõtluse ja Innovatsiooni Sihtasutus Eesti Kaitsetööstus MTÜ Vastutustundliku Ettevõtluse Foorum Eesti Mööblitootjate Liit Toiduliit Eesti Keskkonnajuhtimise Assotsiatsioon Eesti Masinatööstuse Liit Eesti Keemiatööstuse Liit Eesti Ehitusmaterjalide Tootjate Liit Eesti Pangaliit MTÜ Arengukoostöö Ümarlaud Teenusmajanduse Koda Eesti Ametiühingute Keskliit Eesti Plastitööstuse Liit Eesti Advokatuur

Bolt Technology OÜ MAXIMA Eesti OÜ Selver AS Rimi Eesti Food AS Luminor Bank AS Enefit Power AS Swedbank AS AS SEB Pank Majandus- ja Kommunikatsiooniministeerium Rahandusministeerium Kliimaministeerium Sotsiaalministeerium Regionaal- ja Põllumajandusministeerium Välisministeerium Kadi Karus 54820222 [email protected]