The end of 2025 brought pivotal moments to the world of European sustainability legislation. Following a year rife with regulatory uncertainty and significant political shifts—including an unprecedented alliance between the EPP and the far right—the rules of the game have finally been clarified.

Let’s take a look at the specific changes brought about by the December agreement (2025) between the European Parliament and the Council.

1. CSDDD (Due Diligence Directive): Higher Thresholds and Limited Liability

The Corporate Sustainability Due Diligence Directive (CSDDD) has undergone a significant “diet.” Here are the key parameters to anticipate:

  • Radical narrowing of scope: The directive will now affect only companies with more than 5,000 employees and a turnover exceeding €1.5 billion. Across the EU, this concerns roughly 1,600 companies. (However, the agreement includes a review clause for future adjustments).

  • Timeline: Implementation is pushed back to mid-2029. The Commission must issue implementation guidelines by mid-2027.

  • Climate plans: The obligation to implement climate transition plans has been struck from the CSDDD. However, note that companies falling under the CSRD must still report on them (or explain why they do not have them).

  • Milder sanctions and liability: The harmonized civil liability regime has been removed. The maximum fine is capped at 3% of worldwide net turnover.

  • Changes in the value chain: A risk-based approach returns. Companies may request detailed data from business partners only if the information is not publicly available or obtainable through other means.

2. CSRD (Reporting Directive): Fewer Reporters, Protection for Small Suppliers

Concessions were also made in the area of reporting in the name of simplification:

  • New compliance threshold: The scope is raised to companies with more than 1,000 employees and €450 million in turnover.

  • Deferral for “dropped” companies: Companies that reported this year but fall out of scope under the new rules will not be required to report for the years 2025 and 2026.

  • Protection for smaller suppliers (Value Chain Cap): Companies under CSRD scope will have limited ability to request data from partners with fewer than 1,000 employees (so-called “protected undertakings”). Reporting data requests must not exceed the framework of the Voluntary SME Standard (VSME). Smaller companies can refuse anything beyond this.

    • Exception: This limitation does not apply to data collection necessary for risk management or due diligence.

  • Sector-specific standards: Mandatory sector-specific standards have been cancelled. Instead, companies themselves can request the development of sector-specific guidance.

3. A Revolution in ESRS Standards

In early December, EFRAG submitted technical advice on the revision of ESRS standards. The goal is simplification based on the experience from the first wave of reporting.

What is changing:

  • The emphasis shifts from formal compliance to the usefulness of information and fair presentation.

  • A significant reduction in mandatory datapoints.

  • Simplification of materiality assessment and documentation.

Despite these easements, significant responsibility remains with the companies. It is essential that companies do not abuse these reliefs (e.g., regarding the quantification of financial effects) and pay attention to data quality. The final standards should be published by June 2026.