Key outcomes of the Parliament’s position
The Parliament's adopted text, secured by a coalition between center-right and far-right groups, introduces several key changes compared to the original proposals.
Corporate Sustainability Reporting Directive (CSRD)
Reduced scope: The employee threshold for EU companies required to report has been increased to 1,750 employees (up from earlier proposed thresholds) with a net annual turnover of €450 million. This dramatically reduces the number of companies covered.
Simplified reporting: Reporting standards (ESRS) would be simplified, requiring fewer qualitative details, and sector-specific reporting would become voluntary.
Value chain cap: Companies would be limited in the extent to which they can request information from their smaller, out-of-scope value chain partners, aiming to protect SMEs from undue administrative burden.
Corporate Sustainability Due Diligence Directive (CSDDD/CS3D)
Narrower scope: The due diligence requirements would now apply only to the largest corporations, with thresholds set at over 5,000 employees and a net annual turnover of €1.5 billion for EU companies.
Removal of mandatory transition plans: The Parliament voted to delete the mandatory requirement for companies to prepare a climate transition plan aligned with the Paris Agreement.
Risk-based due diligence: MEPs endorsed a risk-based approach, directing companies to rely on already available information and only request additional details from smaller business partners as a last resort.
National liability: Liability for breaches of due diligence requirements would be at the national level, rather than the EU level, though offending firms would be required to fully compensate victims for damages.
Next steps: The trilogue negotiations
While the Parliament has set its negotiating position, this is far from the final law. The next critical stage is the 'trilogue' negotiations, which began on November 18, 2025.
Trilogue initiation: The European Parliament will now enter negotiations with the Council of the European Union (representing the EU member state governments) and the European Commission (the EU's executive arm).
Reconciling differences: The Parliament’s position differs significantly from the Council’s already-adopted stance, particularly on the scope and the mandatory nature of climate transition plans. The negotiators will aim to find a common text that all 3 institutions can agree on.
Target for finalization: The parties are hoping to finalize the legislation by the end of 2025.
The road ahead for business
The results of the trilogues will shape the final framework for corporate sustainability in the EU for years to come.
For large corporations: While the Parliament's position offers some simplification, the ultimate scope and requirements remain uncertain. Monitoring the trilogue outcomes will be essential for strategic planning and compliance readiness.
For SMEs: The emphasis on protecting smaller companies from reporting burdens is a key takeaway, but businesses should still prepare for potential (albeit capped) information requests from their larger partners.
For investors and stakeholders: The debate highlights an ongoing tension between the EU's climate ambitions and concerns over administrative burden and competitiveness. The final agreed-upon text will be closely scrutinized for its effectiveness in driving sustainable corporate behavior.
The negotiation phase will be crucial. We will continue to track the developments and provide updates on this pivotal EU legislation.
