EU Council Backs Deeper CSRD and CSDDD Cuts Than Commission Originally Proposed

EU member states have agreed on a Council negotiating position on the Omnibus sustainability simplification proposal that goes substantially further than the European Commission's original package, particularly on the Corporate Sustainability Due Diligence Directive, raising the CSDDD scope threshold to companies with at least 5,000 employees and €1.5 billion in revenue. The Council's position also maintains the Commission's 1,000-employee CSRD threshold while adding a €450 million revenue criterion.

Under the Council's agreed position, the CSDDD scope is dramatically narrowed from the current 1,000-employee threshold to 5,000 employees and €1.5 billion in revenue, removing the vast majority of companies from the sustainability due diligence regulation. The Council also delays the CSDDD transposition deadline by one year to July 2028 and replaces the prior entity-based due diligence approach with a risk-based model focused on areas where actual and potential adverse impacts are most likely to occur. Companies' obligation to adopt climate transition plans is eased, with a new requirement only to adopt a plan and outline implementing actions, and delayed by two years.

The Council's position on the CSRD adds a €450 million revenue threshold on top of the Commission's 1,000-employee criterion, further reducing the number of companies in scope. A new review clause requires the Commission to assess possible extensions of CSRD scope based on data needs for sustainable finance objectives and competitiveness impacts, and to consider a simplified reporting regime. These changes reflect member state pressure to reduce compliance burdens, particularly on mid-sized companies, but have drawn criticism from investor groups and companies that have already invested in building CSRD-compliant reporting infrastructure.

The Council's agreed position now forms its negotiating mandate for trilogue discussions with the European Parliament, which must still agree on its own position. Parliament's Omnibus rapporteur has separately published draft amendments proposing a 3,000-employee CSRD threshold and removing transition plan requirements from the CSDDD. The final shape of the Omnibus package will significantly affect the ESG data available to global investors, including those analysing Indian and emerging market companies through supply chain lenses, as fewer European companies will be required to report on value chain sustainability impacts.

Key figure — 5,000 employees and €1.5 billion revenue — Council's proposed CSDDD scope threshold