European Parliament Votes 382-249 to Drastically Cut CSRD and CSDDD Scope

The European Parliament has voted 382 to 249 to adopt a position dramatically reducing the scope of the EU's Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive, raising the CSRD employee threshold to 1,750 and adding a €450 million revenue criterion, while limiting the CSDDD to companies with 5,000 employees and over €1.5 billion in revenues. The Parliament's position also eliminates the requirement for covered companies to prepare climate transition plans.

The Commission's original Omnibus I proposal released in February 2025 would have reduced CSRD coverage by approximately 80% by moving the employee threshold from 250 to 1,000. Parliament's adopted position goes substantially further, setting a threshold of 1,750 employees and €450 million in revenues—estimated to represent a roughly 95% reduction in scope from the original CSRD ambition. The CSDDD threshold has been raised to 5,000 employees and €1.5 billion in revenues, confining due diligence obligations to only the very largest companies.

The Parliament's position shifts liability for CSDDD non-compliance to the national rather than EU level and directs covered companies to rely on already-available information rather than systematically requesting data from supply chain partners. Smaller companies below the new thresholds will be protected from information requests exceeding voluntary sustainability reporting standards. Sustainable investment groups condemned the vote, with ShareAction warning that it drives a stake through the heart of Europe's wider sustainability agenda.

Trilogue negotiations between Parliament, Council and the Commission are scheduled to begin next week, with the aim of finalising the legislation by end of year. The Council's earlier position was closer to the rejected compromise deal, setting the CSRD threshold at 1,000 employees with a €450 million turnover threshold, and would substantially narrow the gap Parliament is now seeking. For Indian subsidiaries of European companies and Indian exporters to European markets that have been preparing for CSRD and CSDDD obligations, the outcome of trilogue will determine the final scope and timeline of requirements.

Key figure — CSRD scope estimated to be reduced by approximately 95% from its original ambition