EU Officially Revises Sustainability Reporting and Due Diligence Rules

The Council of the European Union formally approved changes to the bloc’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), marking a significant shift in how corporate sustainability obligations will apply across Europe. The reforms aim to simplify regulatory requirements and reduce administrative burdens while maintaining oversight of large corporations’ environmental and social impacts.

Under the revised framework, sustainability reporting requirements will now apply only to companies with more than 1,000 employees and over €450 million in annual net turnover, significantly narrowing the number of companies required to disclose environmental, social, and governance (ESG) information. The amendment changes earlier thresholds that would have covered a much broader range of businesses under EU sustainability reporting rules.

The updated directive also modifies the scope of corporate due diligence obligations related to environmental and human-rights impacts in global supply chains. Under the new rules, mandatory due diligence will apply only to companies with over 5,000 employees and global turnover exceeding €1.5 billion, focusing regulatory scrutiny on the largest corporations considered to have the greatest influence on their value chains.

The reform is part of the EU’s broader effort to balance sustainability regulation with economic competitiveness. The updated directive will enter into force in March 2026, after which EU member states must incorporate the changes into national law, with reporting and compliance obligations gradually taking effect in the coming years.

The revised CSRD and CSDDD scope is now the working reality for European corporates, and even out-of-scope companies with EU customer or investor exposure still face voluntary-disclosure pressure. Our ESG-strategy and sustainability-due-diligence teams help clients evaluate what the revised thresholds mean for their reporting infrastructure and value-chain due-diligence obligations.