On 26 February 2025, the EU Commission presented the first comprehensive reform package aimed at simplifying and increasing the competitiveness of European industry. This package proposes amendments to several key EU directives and regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation and the Carbon Adjustment Mechanism (CBAM).

Key proposed amendments:

• Corporate Sustainability Reporting Directive (CSRD):
  • They are proposed significant cuts in scope a delays.
  • Until 80 % companies, which currently fall under the CSRD, should be removed from the scope of exempted.
  • The remaining companies should have another 2 years for implementation and only then would they have to comply with the requirements.
  • It is expected dramatic reduction of ESRS reporting standards (European Sustainability Reporting Standards) against which it is reported.
  • CSRD range limits will increase on companies with 1,000 employees (from the original 250) and either with a turnover of EUR 50 million (no change) or with assets of EUR 25 million (no change).
  • The next wave of CSRD reporting will take place in 2028 for financial years beginning in 2027 for companies that remain in scope.
  • The principle of double significance remains in place.
  • Detailed information from the value chain will only be necessary if companies in the value chain have more than 1,000 employees.
  • The increased turnover threshold of EUR 450 million does not apply except for the notification under Article 40a by ultimate parent companies outside the EU.
• EU Taxonomy Regulation:
  • Obligations under the Taxonomy Regulation will apply to same postponement of reporting obligations and changes to scope limits as with CSRD.
  • Non-financial corporations with turnover less than EUR 450 million they can decide do not perform taxonomy reporting at all (if they accept that 100 % of their activities are not in line with the taxonomy's sustainability criteria).
  • If they choose to report, they can include KPIs related to activities that are partially in accordance with taxonomy sustainability criteria.
  • For entities that choose to report, the inclusion of a KPI related to operating expenses (OpEx) becomes voluntary (turnover and capital expenditure remain mandatory).
  • Non-financial undertakings are not required to assess the compliance of economic activities that constitute less than 10 % turnover, capital expenditure or operating expenditureThese KPIs may be reported separately as “not significant”.
• Corporate Sustainability Due Diligence Directive (CSDDD):
  • Deadline for CSDDD transposition is extended to July 26, 2027, with the initial application phase for the largest companies being moved to July 26, 2028The dates for the second and third waves of companies remain unchanged.
  • The obligation to “implement” a climate change plan will be replaced by an obligation "accept" the transition plan, which includes implementation measures aimed at compatibility with the Paris Agreement.
  • When consulting stakeholders during the due diligence process, narrower definition of "stakeholders" and excludes consumers, employees of business partners, national human rights and environmental institutions.
  • Member States they will not be able to tighten (so-called "gold-plating") due diligence obligations set out in the CSDDD.
  • Obligation to perform mapping and in-depth analysis is limited only to direct business partners, except in cases where the company has reliable information about the need for analysis also among indirect partners.
  • The last resort requirement to end the relationship is abolished with a business partner who failed to resolve the identified adverse impact.
  • Requirement for suspension of such a relationship remains, but without requiring stakeholder input.
  • Companies must assess the adequacy and effectiveness of their due diligence measures every five years, and not once a year.
  • Mandatory financial penalties will not be imposed based on the company's net global turnover. The Commission will work with Member States to establish guidelines for the relevant sanctions.
  • The comprehensive civil liability regime is being abolished under the current CSDDD and will be replaced by existing national general liability regimes.
  • The CSDDD rule is also repealed. third party status in favour of the legal traditions and systems of the individual Member States.
• Carbon Adjustment Mechanism (CBAM):
  • The following CBAM elements are they are late:
    • The sale of CBAM certificates will be postponed from January 1, 2026 to February 1, 2027.
    • The obligation for CBAM declarants to hold certificates corresponding to 50 % of emissions contained in imported goods at the end of each quarter will be postponed from 1 January 2026 to January 1, 2027.
  • Approximately 90 % importers will be now exempt from CBAM reporting (according to the Commission, they represent only approximately 1 % of embedded emissions).
  • The threshold of EUR 150 will be abolished for the import of goods covered by the CBAM.
  • Importers will only be subject to CBAM when importing over 50 tons net weight per calendar year.
  • CBAM Statements will be due each year by August 31 (instead of May 31st) and the date of submission of CBAM certificates will be moved from May 31st to August 31.
  • If the carbon price paid for the goods in a third country cannot be determined, CBAM declarants will be able to request a reduction in the surrendered CBAM certificates based on annual standard carbon prices.
  • CBAM declarants will be required to hold CBAM certificates corresponding to the 50 % emissions embedded in imported goods (reduced from 80 %).
  • The number of CBAM certificates purchased that will be subject to redemption during a calendar year will be limited to a number equal to 50 % embedded emissions every quarter (and not one third of the total number purchased).
  • CBAM declarants will now have until November 30 for submitting redemption requests (extended from June 30).

It is important to note that this comprehensive reform package is not final and must go through the legislative process before it becomes law. While some businesses will welcome the delays, others may see them as an unnecessary burden. Many are concerned about the long-term consequences of these measures on the EU's reputation as a global leader in sustainability. Spring