Council of the European Union 24 February 2026 definitively approved legislation aimed at simplifying sustainability reporting and due diligence requirements. This move, which is part of a broader package Omnibus I, aims to reduce the administrative burden on businesses, remove unnecessary obstacles and strengthen the EU's overall competitiveness in a changing geopolitical context.

The new rules address two key directives: on corporate sustainability reporting (CSRD) and on corporate sustainability due diligence (CS3D).

Main changes in the CSRD (Reporting)

The scope of the CSRD is being narrowed by raising the thresholds. It will now apply to companies that meet the following criteria:

• More than 1,000 employees.
• Net annual turnover above 450 million euros.

For companies from non-EU countries, modified requirements apply if their parent company within the EU achieves a turnover of over 450 million euros. An important new feature is also temporary exception for companies from the so-called "first wave" (which were supposed to report from 2024), if they no longer fall within the revised scope for 2025 and 2026.

Changes to the CS3D (Due Diligence) Directive

The CS3D Directive has undergone an even more significant narrowing of its scope to focus on the actors with the greatest impact on value chains. The new boundaries are set at:

• More than 5,000 employees.
• Net turnover over 1.5 billion euros.

Key concessions and flexibility:

• Cancellation of transitional plans: The obligation for companies to adopt a transitional climate change mitigation plan under CS3D has been removed.
• Prioritization of impacts: When identifying adverse impacts, companies can prioritize areas where the risk is most likely or most severe, focusing on direct business partners.
• Protection of minor partners: Companies should base their decisions on "reasonably available information", thereby limiting the transfer of information burden to smaller suppliers (the so-called trickle-down effect).
• Liability and sanctions: The harmonised liability regime at EU level has been removed. Companies will be held liable at national level for non-compliance with the rules, with the maximum fine is set at 3 % net worldwide turnover.

Context and timeline

This "simplification revolution" is a direct response to the calls of EU leaders and the reports of Enrico Letta and Mario Draghi, which highlighted the need to drastically reduce bureaucracy for European businesses.

Member States now have time to transpose these changes into their national laws. The transposition deadline for CS3D has been postponed by one year to July 26, 2028, with companies having to start complying with the new measures from July 2029. The legislation itself will enter into force on the twentieth day after its publication in the Official Journal of the EU. JRi&CO2AI