Towards balanced compliance | EU Council endorses sustainability law simplification

On 23 June 2025, the EU Council adopted its negotiating position on the proposed amendments to the CSRD and CS3D, introduced by the Commission through the Omnibus Packages, endorsing the Commission’s regulatory approach aimed at alleviating compliance burdens.

Key Elements of EU Council’s negotiating mandate

1. CSRD 

• In addition to the threshold of 1,000 employees and the exemption of listed SMEs, an additional turnover criterium of €450 million to be adopted for the enforcement of sustainability reporting; and
• Introduction of a review clause for the possible extension of the scope of the CSRD.

2. CS3D

• Introduction of increased thresholds as regards the companies which fall within the scope of CS3D, being companies with more than 5,000 employees and at least €1.5 billion net turnover.
• Adoption of a risk-based, tier-1 focused (direct business partners) approach with respect to the implementation of due diligence requirements, without prejudice to cases of objective and verifiable information suggesting adverse impacts beyond direct business partners.
• Introduction of a review clause related to a possible extension of the aforesaid obligations beyond the ‘tier 1’.
• Climate transition plan obligations to remain but simplified and the obligation to adopt transition plans to be delayed by two years.
• Harmonised EU civil liability regime for non-compliance with due diligence obligations to be excluded.
• Transposition deadline of CS3D to be extended to 26 July 2028.

Next Steps

European Parliament is expected to finalise its own position in the coming weeks. Once both co-legislators are aligned, formal negotiations can commence, with the objective of reaching an agreement before year-end.