Yesterday (13th October 2025) The European Parliament’s Committee on Legal Affairs voted to significantly narrow the scope of both the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), limiting their application to only the largest companies. The decision follows months of intense lobbying from business groups and mounting pressure from the EU’s largest member states, who have called for streamlined reporting obligations in a bid to bolster corporate competitiveness.
Swedish MEP, Jörgen Warborn, has said: “Today’s vote confirms our support for simplification. We are delivering predictability for European companies, with a report that cuts costs, strengthens competitiveness, and keeps Europe’s green transition on track.”[i]
The CSDDD is a regulation which will impose sustainability and human rights due diligence standards on firms operating within the EU, and the CSRD will require businesses in the EU to disclose their environmental and social impacts. Now following Monday’s vote, where both the CSDDD and CSRD had been due to apply to companies with at least 250 employees, this will now be increased:
· CSDDD will now be limited to companies with at least 5,000 employees and €1.5 billion ($1.73 billion) in annual revenue. Businesses will also be required to ensure they have transition plans that align with EU climate law and the Paris Agreement.
· The CSRD will only apply to companies with at least 1,000 employees and annual revenue of €450 million ($520 million) or more, though financial holdings and listed subsidiaries will be exempt.
The committee has requested that the European Parliament now start negotiations with EU countries to agree to finalised CSRD and CSDDD rules. A vote is expected in Parliament’s Legal Affairs committee early next week, followed by a full vote in the EU Parliament before the end of this year.
The decision to narrow the scope of the CSDDD and CSRD comes on the heels of implementation delays for both directives, previously announced as part of the EU’s ‘Omnibus’ package earlier this year.
In a vote held in April, MEPs overwhelmingly voted to support delays to the above pieces of sustainability legislation. It meant that the deadline for EU countries to enact the CSRD into national law would be pushed back by a further year, moving the deadline to July 2027. Additionally, the deadline for compliance for companies currently under the directive’s scope would also be pushed back.
Further, EU companies with more than 5,000 employees and net turnover higher than €1.5 billion ($1.73 billion), as well as non-EU companies with a turnover above this threshold who operate within the EU, would now be granted until 2028 to comply, while SMEs will be required to submit sustainability reporting in 2029. Lastly, the CSDDD was given a one-year extension, providing EU member states with additional time to transpose and apply the directive into national law.
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
