Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements
Date: 2025-02-26
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: European standard, activity report, corporate social responsibility, disclosure of information, environmental impact, large business, small and medium-sized enterprises, standard, sustainable development, trade information

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   EUROPEAN COMMISSION  Brussels, 26.2.2025  COM(2025) 81 final 2025/0045 (COD)  Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements (Text with EEA relevance) {SWD(2025) 80}  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

General context and objectives 

In  his  report  on  ‘The  Future  of  European  Competitiveness’,  Mario  Draghi  emphasised  the 
need  for  Europe  to  create  a  regulatory  landscape  which  facilitates  competitiveness  and 
resilience,  drawing  attention  to  burden  and  compliance  costs  created  by  the  Corporate 
Sustainability  Reporting  Directive  (CSRD)  and  the  Corporate  Sustainability  Due  Diligence 
Directive  (CSDDD).1  In  the  Budapest  Declaration  on  the  New  European  Competitiveness 
Deal, EU Heads of State and Government called for ‘a simplification revolution, ensuring a 
clear,  simple  and  smart  regulatory  framework  for  businesses  and  drastically  reducing 
administrative, regulatory and reporting burdens, in particular for SMEs’.2 They called on the 
Commission to make concrete proposals to reduce reporting requirements by at least 25 % in 
the first half of 2025.  

In  its  Communication  on  the  Competitive  Compass  for  the  EU,  the  Commission  confirmed 
that  it  would  propose  a  first  ‘Simplification  Omnibus  package’  which  would  include  far-
reaching  simplification  in  the  fields  of  sustainable  finance  reporting,  sustainability  due 
diligence  and  taxonomy.3  In  its  Communication  entitled  ‘A  simpler  and  faster  Europe: 
Communication  on  implementation  and  simplification’,  the  Commission  set  out  an 
implementation  and  simplification  agenda  that  delivers  fast  and  visible  improvements  for 
people  and  business  on  the  ground,  requiring  more  than  an  incremental  approach  and 
underlining  the  need  for  bold  action  to  streamline  and  simplify  EU,  national  and  regional 
rules.4 

The CSRD entered into force on 5 January 2023.5 It strengthened and modernised corporate 
sustainability  reporting requirements through modifications to  the Accounting Directive, the 
Transparency  Directive,  the  Audit  Directive  and  the  Audit  Regulation.6  The  CSRD  is  an 
important element of the European Green Deal and of the Sustainable Finance Action Plan.7 It 
aims  to  ensure  that  investors  have  the  information  they  need  to  understand  and  manage  the 
risks to which investee companies are exposed  from climate change and other sustainability 
issues. It also aims to ensure that investors and other stakeholders have the information they 

1 
“The future of European competitiveness”, September 2024.  
2 
Budapest Declaration on the New European Competitiveness Deal, 8 November 2024. 
3 
Communication from the Commission to the European Parliament, the European council, the Council, 
the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions,  COM  (2025)  30  final:  A 
Competitiveness Compass for the EU. 
4 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions, COM (2025) 47 final: A simpler and faster 
Europe: Communication on implementation and simplification. 
5 
(Corporate Sustainability Reporting Directive). 
6 
Directive  2013/34/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  (Accounting 
Directive).  Directive  2004/109/EC  of  the  European  Parliament  and  of  the  Council  of  15  December  2004 
(Transparency Directive). Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 
(Audit  Directive).  Regulation  (EU)  No  537/2014  of  the  European  Parliament  and  of  the  Council  of  16  April 
2014 (Audit Regulation). 
7 
Communication from the Commission ‘Action Plan: Financing Sustainable Growth’, COM/2018/097 final. 

Directive  (EU)  2022/2464  of  the  European  Parliament  and  of  the  Council  of  14  December  2022 

the  Commission,  ‘The  European  Green  Deal,  COM(2019)  640  final. 

Communication  from 

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need about the impacts of companies on people and the environment. It thereby contributes to 
financial  stability  and  environmental  integrity.  This  is  a  necessary  condition  for  financial 
resources  to  flow  to  companies  that  pursue  sustainability  goals  and  creates  more 
accountability and transparency towards all stakeholders regarding companies’ sustainability 
performance.  

The CSDDD entered into force on 25 July 20248. It aims to ensure that companies operating 
in  the  EU  single  market  contribute  to  attaining  the  European  Union’s  broader  ambition  to 
transition  towards  a  sustainable  and  climate-neutral  economy  putting  in  place  adequate 
governance and management systems and taking appropriate measures to identify and address 
adverse  human  rights  and  environmental  impacts  in  their  own  operations,  as  well  as  in  the 
operations of their subsidiaries and their global value chains. In addition, it aims to ensure that 
companies adopt and put into effect a transition plan for climate change mitigation.  

The  CSRD  and  the  CSDDD  are  now  being  implemented  in  a  new  and  difficult  context. 
Russia’s war of aggression against Ukraine has driven up energy prices for EU undertakings. 
Trade  tensions  are  rising  as  the  geopolitical  landscape  continues  to  shift.  The  different 
approach undertaken by some other major jurisdictions regarding the regulation of corporate 
sustainability reporting and due diligence raises questions about the effects of these laws on 
the competitive positioning of EU companies. The ability of the Union to preserve and protect 
its values depends amongst other things on the capacity of its economy to adapt and compete 
in an unstable and sometimes hostile geopolitical context. 

This  proposal  therefore  contains  provisions  to  simplify  and  streamline  the  regulatory 
framework with  a view  to  reduce the burden  on  undertakings resulting  from  the CSRD and 
the  CSDDD  without  undermining  the  policy  objectives  of  either  piece  of  legislation  and  to 
ensure  more  cost-effective  delivery  of  the  overall  ambition  of  the  European  Green  Deal 
related to the green and just transition.  

The  proposal  includes  several  important  simplifications  and  flexibilities,  which  may 
encourage undertakings to voluntarily apply sustainability and taxonomy reporting at a bigger 
scale. Companies with strong sustainability profiles could benefit from this as differentiator, 
potentially  gaining  an  edge  in  attracting  investments  into  their  businesses.  Companies  in 
transition  can  benefit  from  voluntary  reporting  since  these  undertakings  can  decide  how  to 
communicate their transition strategies without the pressure of mandatory disclosures, while 
also attracting investments. 

In  parallel  to  this  proposal,  the  Commission  is  submitting  a  separate  legislative  proposal  to 
postpone the entry into application of the CSDDD and of certain provisions of the CSRD.   

Specific context and objectives of this proposal regarding the CSRD 

The CSRD is currently scheduled to apply to large undertakings, SMEs with securities listed 
on the EU regulated markets,  parent  undertakings of large groups, as well as to  issuers that 
belong  to  these  categories  of  undertakings.  The  entry  into  application  of  the  reporting 
requirements  introduced  by  the  CSRD  is  phased  in  according  to  different  categories  of 
undertakings.  In  the  first  wave,  large  public  interest  entities  with  more  than  500  employees 

8 
Sustainability Due Diligence Directive). 

Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024  (Corporate 

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must report for the first time in 2025 for financial year 2024.9 In the second wave, other large 
undertakings  must  report  in  2026  for  financial  year  2025.10  In  the  third  wave,  SMEs  with 
securities listed in EU regulated markets must report in 2027 for financial year 2026, although 
they  have  a  possibility  to  opt  out  of  reporting  for  financial  years  2026  and  2027.11  In  the 
fourth  wave,  certain  non-EU  undertakings  that  have  business  in  the  territory  of  the  Union 
above certain thresholds must report in 2029 for financial year 2028.12  

The  CSRD  requires  undertakings  in  scope  to  report  sustainability  information  according  to 
mandatory European Sustainability Reporting Standards (ESRS) and requires the Commission 
to adopt such standards through delegated acts. In July 2023 the Commission adopted a first 
set of ESRS which are sector-agnostic, meaning they are to be applied by all undertakings in 
scope  independently  of  the  sector  of  the  economy  in  which  the  undertaking  operates.13  The 
CSRD also requires the Commission to adopt sector-specific reporting standards, with a first 
set  of  such  standards  to  be  adopted  by  June  2026.  The  CSRD  allows  listed  SMEs  to  report 
using a separate and lighter, proportionate set of standards instead of the full set of ESRS.  

At the request of the Commission, EFRAG has submitted a sustainability reporting standard 
for  voluntary  use  by  SMEs  that  are  not  in  scope  of  the  reporting  requirements  (VSME 
standard).14 The  objective of the VSME  standard  is  to  provide SMEs  with  a  simple, widely 
recognised  tool  through  which  they  can  provide  sustainability  information  to  banks,  large 
companies and other stakeholders that may demand such information. 

Other important aspects of the CSRD are the provisions on assurance and on reporting value-
chain  information.  Undertakings  must  publish  their  sustainability  information  together  with 
the opinion of a statutory auditor or, if the Member States allows, an independent assurance 
service provider. The current requirement is for limited assurance and the CSRD provides that 
this  could  in  the  future  become  a  requirement  for  reasonable  assurance  under  certain 
conditions.15  The  CSRD  also  requires  the  Commission  to  adopt  standards  for  sustainability 
assurance by means of delegated acts.  

As well as the other parent undertakings of large groups, for consolidated sustainability reporting. 
Small and non-complex credit institutions, and captive insurance and reinsurance undertakings, are also 

9 
As  well  as  public-interest  entities  that  are  parent  undertakings  of  a  large  group  with  more  than  500 
employees, for consolidated sustainability reporting. “Public-Interest Entities” are defined by Article 2 point (1) 
of  the  Accounting  Directive  as  undertakings  that  are:  (a)  governed  by  the  law  of  a  Member  State  and  whose 
transferable  securities  are  admitted  to  trading  on  an  EU  regulated  market;  (b)  credit  institutions;  (c)  insurance 
undertakings; or (d) designated by Member States as public-interest entities. “Large undertakings” are defined by 
Article 3(4) of the Accounting Directive as undertakings which on their balance sheet dates exceed at least two 
of the three following criteria: (a) balance sheet total: EUR 25 000 000; (b) net turnover: EUR 50 000 000; (c) 
average number of employees during the financial year: 250. 
10 
11 
part of the third wave, although they may only use the additional two-year opt-out if they are listed SMEs.  
12 
According  to  article  40a  of  the  Accounting  Directive,  as  amended  by  the  CSRD,  an  undertaking  not 
established in the EU must report sustainability information  at the group level if it a) generates over EUR 150 
million  in  the  Union  and  b)  has  either  a  subsidiary  in  the  EU  that  is  subject  to  the  sustainability  reporting 
requirements introduced by the CSRD or has an EU branch that generated over EUR 40 million. In this case, the 
legal obligation to publish the report falls on the EU subsidiary or branch.    
13 
2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards. 
14 
is now just EFRAG. It is an independent private multistakeholder body, majority funded by the EU. 
15 
The  amount  of  work  for  a  limited  assurance  engagement  is  significantly  less  than  for  a  reasonable 
assurance engagement. The conclusion of a limited assurance engagement is usually provided in a negative form 
of expression by stating that no matter has been identified by the assurance provider to conclude that the subject 

EFRAG was previously called the European Financial Reporting Advisory Group but its official name 

Commission  Delegated  Regulation  (EU)  2023/2772  of  31  July  2023  supplementing  Directive 

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The CSRD requires undertakings to report value-chain information to the extent necessary for 
understanding  their  sustainability-related  impacts,  risks  and  opportunities.  The  CSRD 
establishes  a  so-called  value-chain  cap,  which  states  that  ESRS  may  not  contain  reporting 
requirements  that  would  require  undertakings  to  obtain  from  SMEs  in  their  value  chain 
information that exceeds the information to be disclosed under the proportionate standard for 
listed SMEs.  

This proposal aims to reduce the reporting burden and to limit the trickle down of obligations 
on  smaller  companies.  Firstly,  this  current  proposal  aims  to  simplify  the  framework  and 
reduce burden in the following ways: 

– 

– 

– 

– 

– 

The  number  of  undertakings  subject 
to  mandatory  sustainability  reporting 
requirements would be reduced by about 80%, taking out of scope large undertakings 
with up to 1000 employees (i.e. some of the undertakings from the second wave and 
some of the undertakings from the first wave) and listed SMEs (i.e. all undertakings 
in  the  third  wave).  The  reporting  requirements  would  only  apply  to  large 
undertakings with more than 1000 employees (i.e. undertakings that have more than 
1000  employees  and  either  a  turnover  above  EUR  50  million  or  a  balance  sheet 
above EUR 25 million). This revised threshold would align the CSRD more closely 
with the CSDDD.16 

For undertakings not subject to mandatory sustainability reporting requirements, the 
Commission  proposes  a  proportionate  standard  for  voluntary  use  which  would  be 
based on the VSME standard developed by EFRAG. According to this proposal, the 
Commission would adopt this voluntary standard as a delegated act. In the meantime, 
to  address  market  demand,  the  Commission  intends  to  issue  a  recommendation  on 
voluntary sustainability reporting as soon as possible, based on the VSME standard 
developed by EFRAG.  

The value-chain cap would be extended and strengthened. It would apply directly to 
the  reporting  company  instead  of  being  only  a  limit  on  what  ESRS  can  specify.  It 
would protect all undertakings with up to 1000 employees rather than just SMEs as is 
currently the case. And the limit would be defined by the voluntary standard adopted 
by  the  Commission  as  a  delegated  act,  based  on  the  VSME  standard  developed  by 
EFRAG. This will substantially reduce the trickle-down effect.  

There would be no sector-specific reporting standards, so avoiding an increase in the 
number of prescribed datapoints that undertakings should report.   

The possibility of moving from a requirement for limited assurance to a requirement 
for reasonable assurance would be removed. This will provide clarity that there will 
be no future increase in costs of assurance for undertakings in scope.   

matter  is  materially  misstated.  The  conclusion  of  a  reasonable  assurance  engagement  is  usually  provided  in  a 
positive form of expression and results in providing an opinion on the measurement of the subject matter against 
previously defined criteria. 
16 
In addition and for reasons of consistency, in Article 40a of the Accounting Directive, the net turnover 
threshold for an undertaking not established in the EU  to be subject to the reporting requirements at the group 
level  would  be  raised  from  EUR  150  million  generated  in  the  Union  to  EUR  450  million.  Furthermore,  for 
reasons of consistency, the threshold for the EU branch under article 40a is raised from EUR 40 million to EUR 
50 million and the threshold for the EU subsidiary is limited to large undertakings as defined in the Accounting 
Directive. The key thresholds of the CSDDD are 1000 employees and EUR 450 million turnover.  

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– 

– 

Instead  of  an  obligation  for  the  Commission  to  adopt  standards  for  sustainability 
assurance by 2026, the Commission will issue targeted assurance guidelines by 2026. 
This will allow the Commission to address emerging issues more quickly in the field 
of  sustainability  assurance  that  may  be  generating  unnecessary  burden  on 
undertakings that are subject to the reporting requirements.   

The proposal introduces an “opt-in” regime where large undertakings with more than 
1000 employees and with a net turnover not exceeding EUR 450 million which claim 
that  their  activities  are  aligned  or  partially  aligned  with  the  EU  Taxonomy  shall 
disclose their turnover and CapEx KPIs and may choose to disclose their OpEx KPI. 
This  “opt-in”  approach  will  eliminate  entirely  the  cost  of  compliance  with  the 
Taxonomy  reporting  rules  for  large  undertakings  with  more  than  1000  employees 
and with a net turnover not exceeding EUR 450 million which do not claim that their 
activities  are  associated  with  economic  activities  that  qualify  as  environmentally 
sustainable under the Taxonomy Regulation. In addition, this proposal provides more 
flexibility  by  allowing  these  undertakings  to  report  on  activities  that  meet  certain 
Taxonomy  technical  screening  criteria  without  meeting  all  of  them.  Such  reporting 
on  partial  alignment  can  foster  a  gradual  environmental  transition  of  activities 
overtime, in line with the aim to scale up transition finance. 

Secondly, the Commission intends to adopt a delegated act to revise the first set of ESRS. To 
deliver swiftly on the simplification and streamlining of the ESRS, and to provide clarity and 
legal certainty to undertakings, the Commission aims to adopt the necessary delegated act as 
soon as possible, and at the latest six months after the entry into force of this proposal. The 
revision  of  the  delegated  act  will  substantially  reduce  the  number  of  mandatory  ESRS 
datapoints  by  (i)  removing  those  deemed  least  important  for  general  purpose  sustainability 
reporting,  (ii)  prioritising  quantitative  datapoints  over  narrative  text  and  (iii)  further 
distinguishing  between  mandatory  and  voluntary  datapoints,  without  undermining 
interoperability  with  global  reporting  standards  and  without  prejudice  to  the  materiality 
assessment of each undertaking. The revision will clarify provisions that are deemed unclear. 
It  will  improve  consistency  with  other  pieces  of  EU  legislation.  It  will  provide  clearer 
instructions on how to apply the materiality principle, to ensure that undertakings only report 
material  information  and  to  reduce  the  risk  that  assurance  service  providers  inadvertently 
encourage  undertakings  to  report  information  that  is  not  necessary  or  dedicate  excessive 
resources to the materiality assessment process. It will simplify the structure and presentation 
of the standards. It will further enhance the already very high degree of interoperability with 
global sustainability reporting standards. It will also make any other modifications that may 
be considered necessary considering the experience of the first application of ESRS.  

Thirdly,  the  separate  proposal  made  by  the  Commission  in  parallel  to  this  proposal  would 
postpone by two years the entry into application of the reporting requirements for the second 
wave  (large  undertakings  that  are  not  public  interest  entities  and  that  have  more  than  500 
employees,  as  well  as  large  undertakings  with  up  to  500  employees17)  and  the  third  wave 
(listed  SMEs,  small  and  non-complex  credit  institutions,  and  captive  insurance  and 
reinsurance undertakings). The objective of the postponement is to avoid a situation in which 
certain  undertakings  are  required  to  report  for  financial  year  2025  (second  wave)  or  2026 
(third wave) and  are then subsequently relieved  of this requirement. Such a situation would 
mean that the undertakings in question incur unnecessary and avoidable costs. 

17 As well as undertakings that are not public-interest entities and that are parent of large groups with more than 
500 employees, and undertakings that are parents of large groups up to 500 employees. 

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The  Commission  invites  co-legislators  to  reach  rapid  agreement  on  that  postponement,  in 
particular to provide the necessary legal clarity for undertakings in the second wave that are 
currently required to report for the first time in 2026 for financial year 2025.  

Specific context and objectives of this proposal regarding the CSDDD 

According  to  the  current  rules,  Member  States  should  transpose  the  CSDD  Directive  by 
26 July 2026. Entry into application is envisaged in three waves: as from July 2027, the rules 
would start  applying only to  the largest  EU companies, i.e. those that  have more than 5000 
employees and report a net annual (worldwide) turnover of more than 1.5 billion euro, as well 
as to non-EU companies that generate more than EUR 1.5 billion net turnover in the EU. In 
the  second  wave,  EU  companies  with  more  than  3000  employees  and  more  than  EUR 
900 million  net  turnover,  as  well  as  non-EU  companies  generating  such  net  turnover  in  the 
EU would need to comply with the new framework as from July 2028. Last, in July 2029, all 
other  companies  falling  under  the  general  scope  would  have  to  start  applying  the  (national 
rules  transposing  the)  Directive.  As  from  this  date,  the  CSDDD  is  estimated  to  apply  to 
approximately  6000  large  EU  companies,  and  some  900  non-EU  companies.  The  personal 
scope  and  phased-in  application  take  into  account  that  companies  of  different  size  have 
different  capacities  to  implement  the  new  mandatory  framework  and,  as  such,  is  a  key 
element in ensuring a proportional approach.  

As  regards  large  companies,  the  Directive  adopts  a  risk-based  approach,  allowing  them  to 
prioritise  addressing  those  impacts  first  which  are  most  likely  or  most  severe.  Also,  the 
Directive requires the company to take “appropriate measures” that are reasonably available 
to it, taking into account the circumstances of the specific case.  

The  Directive  also  enables  cost  sharing  opportunities  through  joint  industry  initiatives  and 
multi-stakeholder initiatives.  

As  regards  preventing  the  shifting  of  the  compliance  burden  on  SME  business  partners,  the 
Directive  requires  large  companies  under  the  scope  to  use  responsible  contractual  clauses, 
investments, support, and improved purchasing practices.  

Despite  all  these  elements,  the  Directive  is  perceived  as  imposing  significant  regulatory 
burden,  in  particular,  when  value  chains  are  very  complex  and  extensive  and  therefore 
business  associations  have called for further simplifications and burden reduction, including 
regarding  SMEs  which  may  allegedly  still  experience  unwanted  trickle-down  effects. 
Furthermore, business associations have pointed to uncertainties linked to a possible increase 
in liability risks.   

While  the  CSDDD  already  incorporates  a  number  of  mechanisms  to  ensure  proportionality 
and to ensure that companies in scope obtain the reputational and resilience benefits of more 
sustainable value-chain management, taking into account companies’ feedback, this proposal 
aims to clarify and simplify the framework, and to reduce the burden of companies, including 
one-off and recurring compliance costs, already in the short-term. In particular, the following 
changes are introduced to this end:  

– 

– 

tailoring  the  obligations  with  respect  to  indirect  business  partners  in  the  chain  of 
activities to cases of circumvention or when there is information pointing to likely or 
actual adverse impacts, 

reducing the required frequency of the periodic monitoring exercises, and 

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– 

clarifying and targeting the scope of stakeholder engagement. 

The  proposal  also  includes  several  other  elements  that  aim  to  increase  legal  certainty  and 
create  a  level  playing  field  in  the  EU,  contributing  to  burden  reduction  and  improved 
international competitiveness. 

In  parallel  with  this  proposal,  the  Commission  has  also  adopted  a  proposal  that  would 
postpone by one year the transposition deadline and remove the first wave for the entry into 
application.  By  advancing  the  deadline  set  out  in  the  Directive  for  adopting  the  general 
guidelines  by  the  Commission  (Article  19(3)),  the  overall  result  is  that  in-scope  companies 
will have two years to prepare for the entry into application allowing them to take fully into 
account the best practices provided in these guidelines. 

• 

Consistency with existing policy provisions in the policy area 

Corporate Sustainability Reporting Directive 

By  removing  the  distinction  between  listed  and  non-listed  undertakings  this  proposal  is 
consistent  with  the  goal  of  the  Capital  Markets  Union  to  make  EU  regulated  markets  more 
attractive as a source of financing. 

The  reporting  requirements  set  out  in  the  CSRD  and  ESRS  aim  to  ensure,  amongst  other 
things,  that  financial  market  participants,  credit  institutions  and  benchmark  administrators 
have access  to  the sustainability information  that they need from  undertakings to  meet  their 
own  reporting  obligations  under  the  Sustainable  Finance  Disclosure  Regulation,  the  Capital 
Requirements Regulation and the Benchmarks Regulation. Undertakings that would no longer 
be  subject  to  the  CSRD reporting  requirements  according  to  this  proposal  may  still  provide 
information to financial market participants, credit institutions and benchmark administrators 
on  a  voluntary  basis.  Where  appropriate  they  may  do  this  using  the  voluntary  reporting 
standards that, according to this proposal, the Commission would adopt as delegated acts.  

According  to  this  proposal,  to  be  in  scope  of  the  sustainability  reporting  requirements 
undertakings must have more than 1000 employees. Since the 1000 employee threshold is one 
of  the  main  criteria  used  to  define  which  undertakings  are  subject  to  the  CSDDD,  this 
proposal promotes closer alignment between the CSRD and CSDDD. 

Undertakings subject to both the CSRD and the CSDDD are not required by the CSDDD to 
report  any  information  additional  to  what  they  are  required  to  report  under  the  CSRD.  The 
proposed modifications will not take out of the CSRD scope any undertakings that are subject 
to  the  CSDDD,  meaning  that  this  consistency  between  the  two  pieces  of  legislation  is 
maintained.     

Consistency with other pieces of EU legislation will be enhanced through modifications to the 
ESRS  delegated  act  where  modifications  to  ESRS  are  the  most  appropriate  means  of 
achieving that goal. 

Corporate Sustainability Due Diligence Directive 

Under  the  CSRD/ESRS,  reporting  on  adverse  impacts  is  not  limited  to  direct  value  chain 
partners.  Consistency  with  the  CSRD  is  maintained  as  the  proposed  changes  to  CSDDD 
limiting due diligence, in the first place, to direct value chain partners are complemented by 
requirements for companies in scope to assess indirect business partners in case of plausible 
information suggesting actual or potential impacts at their level. The CSRD complements the 

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CSDDD regarding due diligence reporting and the scope of both legal acts is now proposed to 
be aligned.  The provision on climate transition plans will be better aligned to the language of 
the  CSRD,  while  continuing  to  complement  CSRD  with  a  clear  obligation  to  adopt  such  a 
plan. 

• 

Consistency with other Union policies 

This  proposal  is  consistent  with  EU  policy  to  enhance  competitiveness,  to  simplify  the 
regulatory framework and to reduce burden on business while still achieving the policy goals 
of  the  CSRD  and  CSDDD.  This  includes  preserving  the  Green  Deal  as  mid-  to  long-term 
competitiveness  depends  on  companies  sufficiently  integrating  sustainability  considerations 
into their operations. 

With regard to the CSDDD, the proposal would simplify and streamline the sustainability due 
diligence  requirements  for  in-scope  companies,  thereby  reducing  administrative  burdens,  in 
line  with  the  objectives set  out  in  the  Competitiveness  Compass,  namely  the  25%  and  35% 
(for SMEs) burden reduction targets.  

At the same time, by reducing impacts on business partners, many of which will be SMEs or 
small mid-caps, the proposal also contributes to the objective of supporting SMEs and small 
mid-caps  and  relieving  them  from  unnecessary  burdens  that  might  negatively  affect  their 
prosperity and growth. Extending the scope of provisions subject to maximum harmonisation 
to cover the core due diligence duties also contributes to the objective of the Single Market by 
avoiding fragmentation through different  national  rules (‘gold-plating’) and ensuring a level 
playing field across the European Union. While removing the uniform rules on civil liability 
reduces harmonisation, it ensures respect for existing, national liability regimes – with which 
companies  in  scope  are  familiar  -  in  line  with  the  subsidiarity  principle  and  ensures  greater 
legal certainty on liability risks under a new type of risk-based corporate obligations. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposal’s legal basis rests on Articles 50 and 114 of the Treaty on the Functioning of the 
European Union (TFEU). Article 50 of the TFEU is the legal basis for adopting EU measures 
aimed  at  attaining  the  right  of  establishment  in  the  single  market  in  company  law,  and  it 
mandates the European Parliament and the Council to act by means of Directives. Article 50 
of the TFEU is the legal basis for Directives 2006/43/EC and 2013/34/EU, as well as part of 
the  legal  basis  for  Directive  (EU)  2022/2464  and  Directive  (EU)  2024/1760.  Article  114  of 
the  TFEU  is  a  general  legal  basis  with  the  objective  of  establishing  or  ensuring  the 
functioning of the single market – in this case, the free movement of capital and the freedom 
of  establishment.  Article  114  of  the  TFEU  is  part  of  the  legal  basis  for  Directive  (EU) 
2022/2464 and Directive (EU) 2024/1760. 

• 

Subsidiarity (for non-exclusive competence)  

Corporate Sustainability Reporting Directive 

The  Accounting  Directive,  as  amended  by  the  CSRD,  already  regulates  the  disclosure  of 
sustainability  information  in  the  EU.  Common  rules  on  sustainability  reporting  and  its 
assurance  ensure  a  level  playing  field  for  companies  established  in  the  different  Member 
States.  Significant  differences  in  requirements  for  sustainability  reporting  and  assurance 
between  Member  States  would  create  additional  costs  and  complexity  for  companies 

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operating  across  borders,  which  would  be  detrimental  to  the  single  market.  Member  States 
acting alone are not able to modify existing EU laws to reduce the burden on companies.   

Corporate Sustainability Due Diligence Directive 

The  CSDDD  ensures  a  level  playing  field  across  the  European  Union  by  harmonising  the 
rules  on  corporate  sustainability  due  diligence  against  the  background  of  diverging  existing 
due diligence legislation at Member State level. In this light, the objective of simplifying and 
streamlining  the  due  diligence  requirements  and  related  provisions  on  public  and  private 
enforcement  cannot  be  achieved  by  the  Member  States  alone.  Therefore,  action  at  the  EU 
level is necessary.  

• 

Proportionality 

Corporate Sustainability Reporting Directive 

This proposal sets out a simple and proportionate framework for sustainability reporting that 
would treat undertakings according to their size: 

– 

– 

Large undertakings with more than 1000 employees (i.e. undertakings that have more 
than 1000 employees and either a turnover above EUR 50 million or a balance sheet 
above  EUR  25  million)18:  subject  to  mandatory  reporting  requirements  and  must 
report against the full set of ESRS, which will itself be revised and simplified. 

Out-of-scope undertakings (undertakings with up to 1000 employees): not subject to 
mandatory reporting  requirements,  may use the  proportionate  voluntary  standard to 
be  adopted  by  the  Commission  as  a  delegated  act,  based  on  the  VSME  standard 
developed  by  EFRAG  and  are  protected  by  the  value-chain  cap  from  excessive 
information requests from larger companies within scope.  

This  framework  is  a  more  proportionate  means  of  achieving  the  policy  objectives  of  the 
CSRD.  

Corporate Sustainability Due Diligence Directive 

With the proposed amendments the CSDDD becomes more proportionate as the changes aim 
to  simplify  and  streamline  sustainability  due  diligence  obligations  of  companies  without 
undermining  the  objectives  of  the  Directive  and  the  EU’s  sustainability  framework.  The 
underlying  policy  objective  of  this  proposal  is  precisely  to  further  strengthen  the 
proportionality  of the Directive with  a view to  increase its efficiency in  achieving its goals, 
reflecting  on  calls  from  some  stakeholders  who  consider  that  the  CSDDD  as  currently  in 
force,  would  have  placed  excessive  burden  on  businesses.  Targeting  the  obligations  with 
respect to indirect business partners in the value chain, reducing the required frequency of the 
periodic monitoring exercises, as well as streamlining the definition of stakeholders and better 
targeting  engagement  to  relevant  stakeholders  and  limiting  the  due  diligence  steps  when 
engagement is required are all examples for the proposed elements that are designed to make 
the Directive more proportionate.  

18 
basis, for consolidated sustainability reporting.  

As well as parent undertakings of groups with more than 1000 employees on average on a consolidated 

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• 

Choice of the instrument 

This  proposal  is  composed  of  a  Directive  that  amends  provisions  of  the  Audit  Directive, 
Accounting  Directive,  Corporate  Sustainability  Reporting  Directive  (CSRD)  and  Corporate 
Sustainability  Due  Diligence  Directive  (CSDDD).  These  directives  set  out  complementary 
reporting and behavioural duties in the area of sustainability, and an Omnibus Directive is the 
most  appropriate  legal  instrument  to  amend  such  existing  inter-linked  Directives  with  the 
common objective as regards simplification and burden reduction.   

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The  CSDDD  has  not  yet  been  transposed  or  applied  by  companies.  The  CSRD  has  been 
applied  by  a  first  set  of  companies  who  are  publishing  their  first  sustainability  statements 
mainly  in  the  first  half  of  2025.  It  has  therefore  not  been  possible  to  undertake  an  ex-post 
evaluation or fitness check of either piece of legislation.   

• 

Stakeholder consultations 

The following consultation activities have helped to shape the content of this proposal.  

– 

– 

– 

– 

European  Commission  ‘Call  for  evidence  on  the  rationalisation  of  reporting 
requirements’, from October to December 2023.19  

European  Commission  meetings  with  companies  and  other  stakeholders  in  early 
February 2025. 

The  European  Commission  has  also  held  separate  stakeholder  activities  including 
two large hybrid stakeholder forums on the CSRD in May and November 2024 with 
the participation of approximately 400 people in person and more than 3000 people 
virtually. 

The European Commission received a very significant number of letters and detailed 
analyses  from  all  types  of  stakeholders  (from  companies  to  investors,  banks,  civil 
society,  Non-Governmental  Organisations,  chambers  of  commerce  and  Member 
States’ national administrations). 

Corporate Sustainability Reporting Directive 

The  European  Commission’s  Call  for  Evidence  on  the  Rationalisation  of  Reporting 
Requirements  sought  evidence  and  views  regarding  regulations  which  are  perceived  to 
produce administrative burden. Almost 200 stakeholders responded, and primarily called for a 
simplification of sustainability reporting, due diligence and the EU Taxonomy.  

In  the  European  Commission’s  meetings  with  European  industry,  social  partners  and  civil 
society  in  early  February  2025  –  including,  in  particular,  a  two  days-stakeholder  event 
(‘reality  check’)  that  allowed  the  Commission  to  hear  from  practitioners  –  stakeholders 
expressed support for the overarching objectives of the CSRD and CSDDD but highlighted a 
their  implementation.  Many  business 
need  for  simplification  and  harmonisation  in 

19 
From  17  October  to 1  December  2023,  the  Commission  gathered  feedback  from 193  stakeholders on 
requirements: https://ec.europa.eu/info/law/better-
possible 
regulation/have-your-say/initiatives/13990-Administrative-burden-rationalisation-of-reporting-requirements_en. 

rationalization  measures 

reporting 

for 

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10 

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representatives stated that some of the sustainability disclosure requirements in the ESRS are 
overly  complex  and  numerous,  and  called  for  a  revision  of  the  ESRS  to  reduce  the  number 
and  complexity  of  the  disclosure  requirements.  They  recommended  to  further  consider 
interoperability of European standards with international ones, as well as to limit value chain 
reporting requirements.  

Some stakeholders have argued for a reduction in scope of the CSRD to relieve listed SMEs 
and smaller large companies from sustainability reporting requirements. Some advocated for 
achieving simplification by means of keeping smaller large companies within the scope of the 
CSRD but  allowing them  to apply  proportionate reporting  standards instead of applying the 
first set of ESRS. SME stakeholders highlighted the need to address the trickle-down effect on 
SMEs in the value chain from sustainability reporting requirements and  pointed out that the 
lighter  reporting  regime  for  them  should  not  be  undermined  by  more  extensive  information 
requests along the supply chain or by financial institutions.  

While some stakeholders suggested pausing the application of existing legislation to focus on 
simplification,  others  saw  strong  merits  in  maintaining  the  rules  and  argued  for  the 
importance  of  legal  certainty  and  regulatory  stability  for  companies,  as  well  as  for 
maintaining  the  objectives  of  the  European  Green  Deal  and  the  Sustainable  Finance  Action 
Plan. They also argued that implementation guidelines should be used to clarify and simplify 
certain parts of the sustainability reporting framework, instead of an extensive change to the 
existing rules. Representatives of civil society argued that progressive companies should not 
be  treated  less  favourably  than  others.  They  highlighted  the  demand  for  sustainability 
information from financial markets and end-investors.  

Many  stakeholders  noted  that  the  assurance  requirements  are  creating  a  situation  of  over-
compliance.  In  this  context,  certain  stakeholders  called  for  a  postponement  of  the  limited 
assurance  requirement  or  urged  the  Commission  to  quickly  adopt  guidelines  for  limited 
assurance in order to clarify the requirements.  

Many  business  and  industry  stakeholders  called  for  either  a  further  postponement  of  the 
sector-specific sustainability reporting standards or requested that the requirement for sector-
specific standards be removed completely from the CSRD. Companies highlighted the need to 
correctly  implement  and  become  accustomed  to  reporting  under  the  first  set  of  ESRS  and 
argued  that  introducing  sector-specific  disclosure  standards  on  top  of  the  first  set  of  ESRS 
would further complicate the sustainability reporting process.  

Stakeholders also called for clear guidance as regards the double materiality assessment under 
ESRS.  Many  called  for  increased  consistency  of  requirements  and  harmonised  definitions 
across different pieces of legislation, such as CSRD, CSDDD, Taxonomy, SFDR, etc.  

The  need  for  simplification  has  also  been  echoed  by  many  other  reports,  recommendations, 
and  stakeholder  views  from  both  financial  and  non-financial  sector  undertakings,  many  of 
which  underscore  the  importance  of  reducing  complexity  and  administrative  burdens  and 
which have informed the burden reduction measures described in this proposal.   

Corporate Sustainability Due Diligence Directive 

Consultations  with  various  stakeholders,  including  businesses,  trade  associations,  and  civil 
society  organizations,  as  well  as  other  contacts  with  and  inputs  received  from  stakeholders 
have informed the proposal. This includes, in particular, a two days-stakeholder event (‘reality 
check’) that allowed the Commission to hear from practitioners about which challenges they 

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see  with  the  current  legislative  framework  and  what  could  be  possible  solutions  to  address 
them.  While  some  stakeholders  called  for  far-reaching  changes  and  postponements,  others 
emphasized  the  need  for  regulatory  certainty  and  opposed  reopening  the  Directive,  instead 
focusing on implementation. This proposal aims to balance these perspectives by maintaining 
the  integrity  of  the  CSDDD  while  introducing  changes  to  simplify  and  streamline  the 
Directive. 

• 

Collection and use of expertise 

To  prepare  this  proposal  the  Commission  has  taken  account  of  analyses  produced  by 
stakeholders  and  experts  on  the  actual  and  future  implementation  of  the  Corporate 
Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. 
In  addition,  the  proposal  has  been  informed  by  input  from  relevant  stakeholders,  including 
companies’ sustainability officers.   

• 

Impact assessment 

The  issue  of  competitiveness  is  of  critical  urgency  as  it  directly  influences  the  European 
Union's ability to achieve sustainable economic growth and maintain its position in the global 
market. Competitiveness, tied closely to innovation, efficiency, and sustainability, is essential 
for  fostering  economic  resilience  and  ensuring  that  EU  businesses  can  thrive  in  a  rapidly 
evolving  global  landscape.  The  current  economic  environment,  characterized  by  rapid 
technological  advancements,  shifting  consumer  demands,  and  increased  global  competition, 
necessitates  swift  action  to  safeguard  the  EU's  competitive  edge.  Given  this  urgency,  the 
proposal does not allow for an impact assessment.  

However, it is important to note that this initiative involves amendments to existing legal acts, 
which have already undergone comprehensive impact assessments. The insights and evidence 
gathered  from  those  previous  assessments,  together  with  input  from  stakeholders  and 
discussions with practitioners, have helped to shape the current proposal. For that reason, and 
given  the  importance  and  urgency  of  this  initiative,  a  derogation  was  granted  under  the 
Commission’s Better Regulation Guidelines. Accordingly, no full-fledged impact assessment 
has  been  prepared  but  the  proposal  is  accompanied  by  a  Commission  Staff  Working 
Document  that  includes  an  analysis  of  the  impacts  of  the  proposed  measures,  including  a 
qualitative  analysis  and,  where  possible,  estimations  of  costs  savings  as  well  as  supporting 
evidence. 

• 

Regulatory fitness and simplification 

Corporate Sustainability Reporting Directive 

This  proposal  is  expressly  designed  to  achieve  a  major  simplification  of  the  sustainability 
reporting regime.  

Corporate Sustainability Due Diligence Directive 

The  proposal  contributes  to  regulatory  fitness  by  reducing  burdens  and  ensuring  a  more 
coherent  and  simpler  regulatory  environment,  while  respecting  the  EU's  sustainability 
objectives. 

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• 

Fundamental rights 

Corporate Sustainability Reporting Directive 

The proposal respects the fundamental rights enshrined, and adheres to the principles stated, 
in  the  Charter  of  Fundamental  Rights  of  the  European  Union.  The  Corporate  Sustainability 
Reporting  Directive  has  an  indirect  positive  impact  on  fundamental  rights,  given  that 
sustainability  reporting  requirements  can  influence  corporate  behaviour  for  the  better.  It 
serves  to  make  companies  more  aware  of  fundamental  rights  and  positively  influence  how 
they  identify  and  manage  actual  and  potential  adverse  impacts  on  fundamental  rights.  The 
proposed  modifications  may  partially  diminish  these  positive  impacts  with  regard  to 
companies  that  would  no  longer  be  subject  to  mandatory  reporting  requirements,  but  the 
reduction of administrative burden on such companies should lead to other societal gains in 
terms of wealth creation, employment and innovation, including innovation for sustainability.  

Corporate Sustainability Due Diligence Directive 

The proposal respects the fundamental rights enshrined, and adheres to the principles stated, 
in  the  Charter  of  Fundamental  Rights  of  the  European  Union.  One  of  the  CSDDD’s  main 
objective was to improve human rights protection through companies addressing their human 
rights impacts in their chains of activities. The targeting of obligations regarding the chain of 
activities,  which  requires  action  beyond  direct  business  partners  whenever  the  company  in 
scope  of  the  Directive  has  plausible  information  pointing  to  such  adverse  impacts,  is  a 
recognition  of  the  fact  that  adverse  human  rights  impacts  often  arise  in  indirect  business 
relationships. While their obligations to pro-actively identify such impacts will be reduced to 
avoid  burdens  from  systematically  addressing  all  parts  of  often  complex  value  chains, 
companies  will  continue  to  have  a  responsibility  to  respect  human  rights  along  their  value 
chains in the future when they have such information.      

4. 

BUDGETARY IMPLICATIONS 

The proposal does not have any new implications on the Union budget.  

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

To  monitor  progress  towards  achieving  the  proposal’s  specific  objectives,  the  Commission 
will explore the possibility of organising exchanges with stakeholders in different formats as 
well as periodic surveys of users of sustainability information and of undertakings that report 
such information, depending on the availability of financial resources. Article 6 of the CSRD 
requires the Commission to present a report on the implementation of the Directive by April 
2029.  The  implementation  of  the  CSDDD  as  amended,  and  its  effectiveness  in  reaching  its 
objectives,  in  particular  in  addressing  adverse  impacts,  will  also  be  subject  to  regular 
evaluation  according  to  Article  36  of  that  Directive.  This  proposal  does  not  require  an 
implementation plan. 

• 

Explanatory documents (for directives) 

As  the  proposal  introduces  specific  amendments  to  4  existing  directives,  Member  States 
should  either  provide  the  Commission  with  the  text  of  the  specific  amendments  to  national 
provisions  or,  in  the  absence  of  such  amendments,  explain  which  specific  national  law 
provision already implements the amendments provided in the proposal. 

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• 

Detailed explanation of the specific provisions of the proposal 

Corporate Sustainability Reporting Directive 

Article 1 amends Directive 2006/43/EC (Audit Directive) as follows:  

– 

– 

paragraph (1) replaces Article 26a(3) of the Audit Directive to delete the time limits 
for  the  Commission  to  adopt  standards  for  limited  assurance  and  to  delete  the 
empowerment  for  the  Commission  to  adopt  standards  for  reasonable  assurance 
together with the related cross-references; 

paragraph  (2)  replaces  Article  48a,  second  subparagraph,  of  the  Audit  Directive  to 
correct an error in the cross-reference to the limited assurance standards.  

Article 2 amends Directive 2013/34/EU (Accounting Directive) as follows:  

– 

– 

paragraph  (1)  modifies  in  Article  1(3)  of  the  Accounting  Directive  the  size  for  an 
undertaking  to  be  in  scope  of  sustainability  reporting  when  that  undertaking  is  a 
credit institution or an insurance undertaking, to reflect the changes made to the size 
of  undertakings  in  the  scope  of  Article  19a  (i.e.  large  undertakings  with  more  than 
1000 employees on average during the financial year); 

paragraph  (1)  also  specifies  in  Article  1(4)  of  the  Accounting  Directive  that  the 
European  Financial  Stability  Facility  (EFSF)  established  by  the  EFSF  Framework 
Agreement is not subject to sustainability reporting; 

– 

paragraph (2) amends Article 19a of the Accounting Directive by: 

• 

• 

the  undertakings  required 

limiting 
individual 
sustainability  reporting  to  only  large  undertakings  with  more  than  1000 
employees on average during the financial year; 

to  prepare  and  publish 

introducing a requirement for Member States to ensure that, for the purposes of 
reporting sustainability information as  required by the Accounting Directive -
and  with  no  prejudice  to  Union  requirements  to  conduct  a  due  diligence 
process  - undertakings do not  seek to  obtain from  undertakings in  their value 
chain with not more than 1000 employees on average during the financial year 
any information that goes beyond the information specified in the standards for 
voluntary  use  to  be  adopted  under  Article  29ca,  except  for  additional 
sustainability information that is commonly shared between undertakings in the 
sector  concerned.  Undertakings  reporting  on  their  value  chain  in  accordance 
with this requirement must be deemed to comply with sustainability reporting; 

• 

deleting the option for listed SMEs to report based on a more proportionate set 
of  standards  and  deleting  the  2-year  opt  out  from  sustainability  reporting  for 
listed  SMEs,  to  reflect  the  exclusion  of  these  companies  from  the  scope  of 
sustainability reporting; 

– 

paragraph (3) inserts Article 19b to allow large undertakings with an average of more 
than 1000 employees and a net turnover not exceeding EUR 450 000 000 during the 
financial  year  to  disclose  information  referred  to  in  Article  8  of  Regulation  (EU) 
2020/852 in a more flexible way;   

– 

paragraph (4) amends Article 29a of the Accounting Directive by: 

• 

limiting  the  undertakings  required  to  prepare  and  publish  consolidated 
sustainability reporting to only parent undertakings of a large group with more 

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than  1000  employees  on  average  during  the  financial  year  on  a  consolidated 
basis;  

• 

introducing a requirement for Member States to ensure that, for the purposes of 
reporting sustainability information as required by the Accounting Directive  -
and  with  no  prejudice  to  Union  requirements  to  conduct  a  due  diligence 
process  - undertakings  do not  seek to  obtain from  undertakings in  their value 
chain with not more than 1000 employees on average during the financial year 
any information that goes beyond the information specified in the standards for 
voluntary  use  to  be  adopted  under  Article  29ca,  except  for  additional 
sustainability information that is commonly shared between undertakings in the 
sector  concerned.  Undertakings  reporting  on  their  value  chain  in  accordance 
with this requirement must be deemed to comply with sustainability reporting; 

– 

paragraph  (5)  inserts  Article  29aa  to  allow  large  undertakings  with  an  average  of 
more than 1000 employees and a net turnover not exceeding EUR 450 000 000, on a 
consolidated  basis,  during  the  financial  year  to  disclose  information  referred  to  in 
Article 8 of Regulation (EU) 2020/852 in a more flexible way;    

– 

paragraph (6) amends Article 29b of the Accounting Directive by: 

• 

• 

deleting  the  empowerment  for  the  Commission  to  adopt  sector-specific 
standards by way of delegated acts; 

specifying  that  the  sustainability  reporting  standards  must  not  specify 
disclosures  requiring  undertakings  to  obtain  from  undertakings  in  their  value 
chain with not more than 1000 employees on average during the financial year 
any information  that goes beyond the information to  be disclosed pursuant  to 
the  sustainability  reporting  standards  for  voluntary  use  to  be  adopted  under 
Article 29ca; 

paragraph (7) deletes Article 29c of the Accounting Directive on the Commission’s 
empowerment  to  adopt  a  more  proportionate  set  of  standards  for  listed  SMEs  to 
reflect the exclusion of these companies from the scope of sustainability reporting; 

paragraph  (8)  inserts  the  new  Article  29ca  in  the  Accounting  Directive,  which 
empowers  the  Commission  to  adopt  delegated  acts  to  provide  for  sustainability 
reporting standards for voluntary use by out-of-scope undertakings. These standards 
must be proportionate and relevant to the capacities and the  characteristics of these 
undertakings  and  to  the  scale  and  complexity  of  their  activities.  They  must  also 
specify, where possible, the structure to be used to present that information; 

paragraph (9) replaces Article 29d of the Accounting Directive to specify that until a 
Delegated  Regulation  for  the  marking  up  of  sustainability  reporting  is  adopted, 
undertakings are not required to markup their sustainability reporting; 

paragraph (10) replaces Article 33(1) of the Accounting Directive to specify that the 
collective responsibility of members of an undertaking’s administrative, management 
and  supervisory  bodies  as  regards  the  digitalisation  of  the  management  report  is 
limited to its publication in the single electronic format, including the digital marking 
up;  

– 

– 

– 

– 

– 

paragraph (11) amends Article 34 of the Accounting Directive by: 

• 

deleting the reference to Article 29c in Article 34(1) to reflect the removal of 
the sustainability reporting standards for listed SMEs;  

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• 

adding  paragraph  2a,  which  specifies  that  assurance  providers  prepare  their 
assurance  opinion  respecting  the  obligation  on  undertakings  not  to  seek  to 
obtain  from  undertakings  in  their  value  chain  with  not  more  than  1000 
employees  on  average  during  the  financial  year  any  information  that  goes 
beyond the information specified in the standards for voluntary use; 

– 

paragraph (12) amends Article 40a(1) of the Accounting Directive by: 

• 

• 

• 

limiting the size for a subsidiary undertaking  to  be in  scope of  Article 40a  to 
the criteria for large undertakings as defined in Article 3(4) of the Accounting 
Directive; 

increasing the net turnover threshold for a branch to be in scope of Article 40a 
from EUR 40 million to EUR 50 million, to align with the turnover threshold 
for large undertakings; 

increasing the net turnover threshold for the third-country undertaking to be in 
scope of Article 40a from EUR 150 million generated in the Union to EUR 450 
million; 

– 

paragraph  (13)  amends  Article  49  of  the  Accounting  Directive  to  empower  the 
Commission to set out rules supplementing the reporting regime for activities that are 
only partially taxonomy aligned. 

Article  3  amends  Article  5(2)  of  Directive  (EU)  2022/2464  (Corporate  Sustainability 
Reporting  Directive  “CSRD”)  to  reflect  the  reduction  of  the  undertakings  in  scope  of 
sustainability reporting under Articles 19a and 29a of the Accounting Directive. In particular: 

– 

– 

– 

– 

– 

– 

– 

paragraph (1) point (a) deletes Article 5(2) subparagraph 1, point (a) of the CSRD to 
reflect the exclusion from scope of some of the undertakings in wave 1;  

paragraph  (1)  point  (b)(i)  replaces  Article  5(2)  subparagraph  1,  point  (b)(i)  of  the 
CSRD  specifying  which  undertakings  will  be  subject  to  individual  sustainability 
reporting  in  wave  2,  i.e.  large  undertakings  with  more  than  1000  employees  on 
average during the financial year;  

paragraph (1) point (b)(ii)) replaces Article 5(2) subparagraph 1, point (b)(ii) of the 
CSRD  specifying  which  undertakings  will  be  subject  to  consolidated  sustainability 
reporting  in  wave  2,  i.e.  parent  undertakings  of  large  groups  with  more  than  1000 
employees on average, on a consolidated basis, during the financial year;  

paragraph (1) point (c) repeals Article 5(2) subparagraph 1, point (c) of the CSRD to 
reflect the exclusion from the scope of listed SMEs;  

paragraph (2) point (a) deletes Article 5(2) subparagraph 3, point (a) of the CSRD to 
reflect the exclusion from scope of some of the issuers in wave 1;  

paragraph  (2)  point  (b)(i)  replaces  Article  5(2)  subparagraph  3,  point  (b)(i)  of  the 
CSRD specifying which issuers will be subject to individual sustainability reporting 
in wave 2, i.e. issuers that are large undertakings with more than 1000 employees on 
average during the financial year;  

paragraph  (2)  point  (b)(ii)  replaces  Article  5(2)  subparagraph  3,  point  (b)(ii)  of  the 
CSRD  specifying  which  issuers  will  be  subject  to  consolidated  sustainability 
reporting  in  wave  2,  i.e.  issuers  that  are  parent  undertakings  of  large  groups  with 
more than 1000 employees on average, on a consolidated basis, during the financial 
year;  

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– 

paragraph (2) point (c) repeals Article 5(2) subparagraph 3, point (c) of the CSRD to 
reflect the exclusion from the scope of issuers that are SMEs.  

Article  4  amends  Directive  (EU)  2024/1760  (Corporate  Sustainability  Due  Diligence 
Directive  ‘CSDDD’)  on  the  following  main  points:  extending  the  scope  of  maximum 
harmonisation, targeting due diligence, as a general rule, to direct business partners, removing 
the duty to terminate the business relationship as a measure of last resort, limiting the notion 
of  ‘stakeholder’  and  further  restricting  the  stages  of  the  due  diligence  process  that  require 
stakeholder  engagement,  extending  the  intervals  in  which  companies  need  to  regularly 
monitor  the  adequacy  and  effectiveness  of  due  diligence  measures,  clarifying  the  principles 
regarding pecuniary penalties and removing the ‘minimum cap’ for fines, removing aspects of 
the civil liability clause and the rules regarding representative actions, changing the provisions 
on  the  implementation  of  the  climate  transition  plans,  deleting  the  review  clause  regarding 
financial services, and bringing forward the adoption of the first set of (general) implementing 
guidelines by the Commission. In particular:  

– 

– 

– 

paragraph (1) replaces Article 1(1), point (c) of the CSDDD to align the description 
of  the  subject  matter  of  the  Directive  with  the  changes  proposed  to  Article  22(1) 
regarding the implementation of the transition plans for climate change mitigation; 

paragraph  (2)  replaces  Article  3(1),  point  (n)  of  the  CSDDD  on  the  definition  of 
‘stakeholders’  to  reduce  the  scope  of  the  ‘stakeholder’  notion  by  simplifying  the 
definition and limiting it to workers and their representatives, and to individuals and 
communities whose rights or interests are (in case of actual adverse impacts) or could 
be (in case of potential adverse impacts) “directly” affected by the products, services 
and  operations  of  the  company,  its  subsidiaries  and  its  business  partners.  This 
includes,  for  instance,  individuals  or  communities  in  the  neighbourhood  of  plants 
operated by business  partners when they  are directly affected by pollution (e.g.,  an 
oil  spill  or  harmful  emissions),  or  indigenous  people  whose  right  to  lands  or 
resources  are  directly  affected  by  how  a  business  partner  acquires,  develops  or 
otherwise uses land, forests or waters;  

paragraph  (3)  replaces  Article  4  of  the  CSDDD  on  the  level  of  harmonisation  to 
extend the scope of maximum harmonisation to several additional provisions of the 
Directive that regulate the core aspects of the due diligence process. This includes in 
particular the identification duty, the duties to address adverse impacts that have been 
or  should  have  been  identified,  and  the  duty  to  provide  for  a  complaints  and 
notification  mechanism.  However,  the  proposal  also  recognises  that  there  are  legal 
limits  of  what  can  be  harmonised  fully  in  a  cross-sectoral  framework  directive 
dealing  with  social  and  environmental  protection  and  which  essentially  sets  out  a 
general process to implement companies’ duty of care with regard to adverse impacts 
linked to  business  activities. Extending  maximum harmonisation  beyond this scope 
would  risk  undermining  human  –  including  labour  –  rights  and  environmental 
standards,  both  existing  or  still  to  be  developed,  for  instance  to  address  emerging 
risks linked to new products or services, while the practical benefits would be very 
limited.  Where  such  risks  are  addressed  by  Member  States,  in  particular  in  areas 
where the  Union has limited competences like for instance labour law, they should 
not be prevented from doing so where they consider this necessary to regulate how 
the duty of care applies in specific circumstances; 

– 

paragraph  (4)  amends  Article  8  of  the  CSDDD  on  identifying  and  assessing  actual 
and  potential  adverse  impacts  by  replacing  paragraph  (2),  point  (b)  and  paragraph 
(4), and by adding new paragraphs (2a) and (5) concerning the chain of activities: 

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• 

to  limit  due  diligence  measures,  as  a  general  rule,  to  the  companies’  own 
operations,  those  of  their  subsidiaries  and,  where  related  to  their  chains  of 
activities, those of their direct business partners. Consequently, when it comes 
to business relationships, following a mapping of their value chains, companies 
would be required to carry out an in-depth assessment only at the level of direct 
business partners. At the same time, the proposal recognises that there can be 
situations where companies have to look beyond their direct business partner, 
namely where they have plausible information that suggests an adverse impact 
at the level of an indirect business partner. This may, for instance, be the case 
where  the  structure  of  the  business  relationship  lacks  economic  rationale  and 
suggests that it was chosen to remove an otherwise direct supplier with harmful 
activities from the purview of the company, where the company has received a 
complaint  or  is  aware  of  credible  NGO  or  media  reports  about  harmful 
activities  at  the  level  of  an  indirect  supplier  or  is  aware  of  past  incidents 
involving  the  supplier,  or  where  the  company  through  its  business  contacts 
knows about problems at a certain location (e.g., conflict area). In these cases, 
companies  should  be  required  to  further  assess  the  situation.  Where  the 
assessment confirms the likelihood or existence of the adverse impact, it should 
be  deemed  to  have  been  identified.  In  addition,  a  company  should  seek  to 
ensure that its code of conduct – which is part of its due diligence policy and 
sets  out  the expectations as  to  how to  protect  human, including  labour, rights 
and the environment in business operations – is followed throughout the chain 
of activities (contractual cascading). This aligns with the approach taken under 
the  German  Supply  Chain  Act  (Lieferkettensorgfaltspflicht-Gesetz)  which 
contains similar rules both as regards the focus on direct suppliers and the ways 
in which due diligence should go beyond in light of the available information. 
The company should also take into account SME support measures; and  

• 

to  further  limit  the  trickle-down  effect  on  companies  with  fewer  than  500 
employees (i.e. SMEs and small midcap companies), by limiting the amount of 
the  information  that  may  be  requested  as  part  of  the  value  chain  mapping  by 
large  companies  to  the  information  specified  in  the  VSME  sustainability 
reporting  standard,  unless  additional  information  is  necessary,  for  instance 
because  the  standards  do  not  cover  a  relevant  impact,  and  where  such 
information cannot reasonably be obtained in any other way.  

paragraphs  (5)  and  (6)  replace  Article  10(6)  and  Article  11(7)  of  the  CSDDD, 
respectively, as regards disengagement in order to remove the duty to terminate the 
business  relationships  in  the  case  of  both  actual  and  potential  adverse  impacts. 
Companies  may  find  themselves  in  situations  where  their  production  heavily  relies 
on  inputs  from  one  or  several  specific  suppliers.  At  the  same  time,  where  the 
business  operations  of  such  a  supplier  are  linked  to  severe  adverse  impacts,  for 
instance  child  labour  or  significant  environmental  harm,  and  the  company  has 
unsuccessfully  exhausted  all  due  diligence  measures  to  address  these  impacts,  the 
company, as a last resort should suspend the business relationship while continuing 
to  work  with  the  supplier  towards  a  solution,  where  possible  using  any  increased 
leverage resulting from the suspension.  

paragraph  (7)  amends  Article  13  on  meaningful  engagement  with  stakeholders,  by 
amending  paragraph  (3),  point  (a),  and  deleting  points  (c)  and  (e),  to  clarify  that 
companies  are  only  required  to  engage  with  “relevant”  stakeholders,  thereby 
underlining that companies do not have to consult every possible stakeholder group 

– 

– 

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18 

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– 

– 

– 

– 

but may limit themselves to those stakeholders that have a link to the specific stage 
of  the  due  diligence  process  being  carried  out  (e.g.,  affected  individuals  when 
designing  a  remediation  measure).  In  addition,  the  proposed  amendments  further 
limit  the  stages  of  the  due  diligence  process  at  which  companies  are  required  to 
engage with stakeholders; 

paragraph (8) amends Article 15 of the CSDDD on monitoring to extend the intervals 
in which companies need to regularly  assess the adequacy and effectiveness of due 
diligence measures, from 1 year to five years. This will significantly reduce burdens 
not  just  for  in-scope  companies  but  also  for  their  business  partners,  often  SMEs, 
which  risk  being  at  the  receiving  end  of  (detailed)  information  requests  as  part  of 
these monitoring exercises. At the same time, the proposal  recognises that business 
relationships,  and  the  risks  and  impacts  arising  from  the  activities  covered  by  such 
business  relationships,  may  evolve  over  time,  sometimes  even  within  short  time 
frames. Also, measures taken to address potential or actual impacts might turn out to 
be  inadequate  or  ineffective,  based  on  experience  gained  with  implementing  them, 
and  indications  for  this  may  arise  before  the  date  for  the  next  regular  assessment. 
Therefore, the company should carry out ad hoc assessments in these situations; 

paragraph  (9)  amends  Article  19(3)  of  the  CSDDD  to  require  the  Commission  to 
make  available  its  general  guidelines  with  practical  guidance  and  best  practices  on 
how to conduct due diligence in accordance with the Directive by half a year; 

paragraph  (10)  amends  Article  22(1)  concerning  companies’  transition  plans  for 
climate change mitigation with a view to ensuring more legal clarity and alignment 
of  the  CSDDD  with  the  sustainability  reporting  regime  of  the  CSRD.  More 
particularly, the proposal introduces a modification regarding the requirement to put 
into  effect  the  transition  plan  for  climate  change  mitigation.  The  proposal  makes 
clear  that  the  plan  should  include  implementation  actions  planned  and  taken.  The 
adoption  of  the  plan  and  its  initial  and  updated  design  remains  subject  to 
administrative supervision; 

paragraph (11) replaces Article 27(4) as regards the imposition of pecuniary penalties 
as  part  of  public  enforcement.  The  current  text  of  Article  27  already  clarifies  that 
“[i]n  deciding  whether  to  impose  penalties  and,  if  such  penalties  are  imposed,  in 
determining their nature and appropriate level”, due account shall be taken of a series 
of  factors  that  determine  the  gravity  of  the  infringement  (in  particular  the  nature, 
gravity  and  duration  of  the  infringement,  and  the  severity  of  the  impacts  resulting 
from  that  infringement)  and  whether  there  are  attenuating  (e.g.,  investments  made 
and  any  targeted  support  provided)  or  aggravating  circumstances  (e.g.,  recidivism). 
In  addition,  the  provision  stipulates  that  any  penalties  imposed  shall  be  “effective, 
proportionate and dissuasive”. This aligns with similar provisions in other pieces of 
EU  legislation,  for  instance  the  General  Data  Protection  Regulation.  While  the 
Directive  does  not  require  Member  States  to  set  a  maximum  amount  of  any  fines 
(i.e.,  a  ‘cap’  or  ‘ceiling’),  it  stipulates  that,  in  case  Member  States  nevertheless 
decide to do so, such a cap “shall be not less than 5 % of the net worldwide turnover 
of  the  company”.  The  purpose  for  introducing  this  provision  was  to  ensure  a  level 
playing field in the Union, by avoiding that Member States set a cap at a  level that 
would  undermine  the  effectiveness  and  dissuasiveness  of  any  fines  imposed  on 
companies under their jurisdiction. However, this provision has led to confusion. In 
particular, while such a cap says nothing about the actual fines imposed in a specific 
case,  it  has  sometimes  been  misunderstood  as  a  minimum  fines  amount.  To  clarify 
the  situation,  the  proposed  amendments  address  the  issue  of  the  level  playing  field 

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differently, namely by tasking the Commission with developing fining guidelines (an 
instrument that also exists in other areas, e.g., competition law and data protection) in 
collaboration with the Member States and by prohibiting Member States from setting 
a  fines  cap  that  would  prevent  supervisory  authorities  from  imposing  penalties  in 
accordance  with  the  factors  and  principles  set  out  in  Article  27(1)  and  (2). 
Furthermore, the proposal deletes the requirement for the fine to be commensurate to 
the company’s net worldwide turnover;  

– 

paragraph (12) amends Article 29 of the CSDDD as regards civil liability by deleting 
paragraph (1),  paragraph (3), point (d)  and  paragraph  (7),  and changing  paragraphs 
(2), (4) and (5):  

• 

• 

• 

to remove the specific, EU-wide liability regime in the Directive. At the same 
time, in line with the core objective of the Directive to ensure the protection of 
victims against human rights violations and environmental harm resulting from 
business  operations,  the  proposed  amendments  maintain  the  requirements  for 
effective  access  to  justice,  including  the  right  to  full  compensation  in  case  a 
company  is  held  liable  for  a  failure  to  comply  with  the  due  diligence 
requirements  under  this  Directive  in  accordance  with  national  law  and  where 
such  failure  caused  damage,  while  also  protecting  companies  from  over-
compensation;  

in view of the different rules and traditions that exist at national level when it 
comes to allowing representative action, to delete the specific requirement set 
out in the CSDDD in this regard; and 

 for the same reason, by deleting the requirement for Member States to ensure 
that the liability rules  are of overriding mandatory application in  cases where 
the law applicable to claims to that effect is not the national law of the Member 
State; and 

– 

paragraph (13) removes Article 36(1) of the CSDDD, deleting the first review clause 
of the Directive that would require the Commission to submit “no later than 26 July 
2026”  a  report  to  the  European  Parliament  and  to  the  Council  on  the  necessity  of 
laying down additional sustainability due diligence requirements tailored to regulated 
financial  undertakings  with  respect  to  the  provision  of  financial  services  and 
investment activities, and the options for such due diligence requirements as well as 
their impacts. It is proposed to delete this review clause as it does not leave any time 
to take into account the experience with the newly established, general due diligence 
framework. 

Article 5 requires Member States to transpose this Directive by [12 months after into force] at 
the latest, and to communicate to the Commission the text of their transposing measures.  

Article  6  specifies  that  this  Directive  enters  into  force  20  days  after  its  publication  in  the 
Official Journal of the European Union. 

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2025/0045 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as 
regards certain corporate sustainability reporting and due diligence requirements 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 50 and 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee20,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

20 
21 

22 

23 

24 

In  its  Communication  of  11  February  2025  entitled  ‘A  simpler  and  faster  Europe: 
Communication  on  implementation  and  simplification’,21  the  European  Commission 
set out a vision for an implementation and simplification agenda that delivers fast and 
visible improvements for people and business on the ground. This requires more than 
an incremental approach and the Union must take bold action to achieve this goal. The 
Commission, the European Parliament, the Council, Member States’ authorities at all 
levels and stakeholders need to work together to streamline and simplify EU, national 
and regional rules and implement policies more effectively. 

In  the  context  of  the  Commission’s  commitment  to  reduce  reporting  burdens  and 
to  amend  Directives  2006/43/EC22,  
enhance  competitiveness, 
2013/34/EU23, (EU) 2022/246424 and (EU) 2024/1760 of the European Parliament and 

is  necessary 

it 

OJ C […], […], p. […]. 
Communication from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions of 11 February 2025, ‘A simpler and faster Europe: Communication 
on implementation and simplification’, COM/2025/47 final. 
Directive  2006/43/EC  of  the  European  Parliament  and  of  the  Council  of  17  May  2006  on  statutory 
audits  of  annual  accounts  and  consolidated  accounts,  amending  Council  Directives  78/660/EEC  and 
83/349/EEC  and 
(OJ  L  157,  9.6.2006,  p.  87, 
ELI: http://data.europa.eu/eli/dir/2006/43/oj). 
Directive  2013/34/EU  of  the European  Parliament  and  of  the  Council  of  26  June  2013 on  the  annual 
financial  statements,  consolidated  financial  statements  and  related  reports  of  certain  types  of 
undertakings,  amending  Directive  2006/43/EC  of  the  European  Parliament  and  of  the  Council  and 
repealing  Council  Directives  78/660/EEC  and  83/349/EEC  (OJ  L  182,  29.6.2013,  p.  19,  ELI: 
http://data.europa.eu/eli/dir/2013/34/oj). 
Directive  (EU)  2022/2464  of  the  European  Parliament  and  of  the  Council  of  14  December  2022 
amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 

repealing  Council  Directive  84/253/EEC 

EN 

21 

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(3) 

(4) 

(5) 

of  the  Council25,  whilst  maintaining  the  policy  objectives  of  the  European  Green 
Deal26, and the Sustainable Finance Action Plan27.  

Article  26a(1)  of  Directive  2006/43/EC  requires  Member  States  to  ensure  that 
statutory auditors and audit firms carry out the assurance of sustainability reporting in 
compliance with limited assurance standards to be adopted by the Commission. Article 
26a(3)  of  that  Directive  requires  the  Commission  to  adopt  those  standards  by  1 
October  2026.  Undertakings  have  raised  concerns  on  the  work  carried  out  by  the 
assurance providers and have expressed the need for flexibility in addressing specific 
risks  and  critical  issues  identified  in  the  areas  of  sustainability  assurance.  To  enable 
the Commission to take account of those concerns, it should be given more flexibility 
in adopting those standards. In any case, the Commission will issue targeted assurance 
guidelines by 2026 that clarify the necessary procedures that assurance providers  are 
to perform as part of their limited assurance engagement before adopting the standards 
by delegated act. 

Article  26a(3),  second  subparagraph,  of  Directive  2006/43/EC  empowers  the 
Commission to adopt standards for reasonable assurance by 1 October 2028, following 
an  assessment  of  feasibility.  To  avoid  an  increase  in  costs  of  assurance  for 
undertakings, the requirement to adopt such standards for reasonable assurance should 
be removed.  

Article  19a(1)  of  Directive  2013/34/EU  requires  large  undertakings  and  small  and 
medium-sized  undertakings  with  securities  admitted  to  trading  on  an  EU  regulated 
market,  excluding  micro-undertakings,  to  prepare  and  publish  a  sustainability 
statement  at  individual  level.  To  reduce  the  reporting  burden  on  undertakings,  the 
obligation to prepare and publish a sustainability statement at individual level should 
be reduced to large undertakings with an average of more than 1000 employees during 
the financial year. Considering that for an undertaking to be large it has to exceed two 
out of the three criteria in Article 3(4) of Directive 2013/34/EU, this means that to be 
subject toto the reporting requirements an undertakings must have an average of more 
than 1000 employees during the financial year and either a net turnover above EUR 50 
million or a balance sheet total above EUR 25 million.  

(6) 

A balance needs to be found between the objectives of data generation and reduction 
of  administrative  burden.  Sustainability  reporting,  including  the  information  referred 
to  in  Article  8  of  Regulation  (EU)  2020/852  of  the  European  Parliament  and  of  the 
Council28, of large undertakings with an average of more than 1000 employees during 
the  financial  year  is  indispensable  to  understand  the  transition  to  a  climate-neutral 

25 

26 

27 

28 

2013/34/EU,  as  regards  corporate  sustainability  reporting  (OJ  L  322,  16.12.2022,  p.  15,  ELI: 
http://data.europa.eu/eli/dir/2022/2464/oj). 
Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate 
sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 
(OJ L, 2024/1760, 5.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1760/oj). 
Communication from the Commission to the European Parliament, the European Council, the Council, 
the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  of  11  December 
2019, ‘The European Green Deal’, COM/2019/640 final. 
Communication from the Commission to the European Parliament, the European Council, the Council, 
the European Central Bank, the European Economic and Social Committee and the Committee of the 
Regions of 8 March 2018, ‘Action Plan: Financing Sustainable Growth’, COM/2018/097 final. 
Regulation  (EU)  2020/852  of  the  European  Parliament  and  of  the  Council  of  18  June  2020  on  the 
establishment  of  a  framework  to  facilitate  sustainable  investment,  and  amending  Regulation  (EU) 
2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj). 

EN 

22 

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(7) 

(8) 

(9) 

economy.  In  the  light  of  the  balance  to  be  found  between  the  objectives  of  data 
generation and reduction of administrative burden, large undertakings within the new 
scope for sustainability reporting that have a net turnover not exceeding EUR 450 000 
000  during  the  financial  year  should  be  able  to  disclose  information  referred  to  in 
Article  8  of  Regulation  (EU)  2020/852  in  a  more  flexible  way.  The  Commission 
should  be  empowered  to  set  out  rules  supplementing  the  reporting  regime  for  those 
undertakings. It should in particular be clarified that the Commission is empowered to 
specify the reporting regime for activities that are only partially taxonomy aligned. 

Article  1(3)  of  Directive  2013/34/EU  specifies  that  credit  institutions  and  insurance 
undertakings  that  are  large  undertakings  or  small  and  medium-size  undertakings  – 
excluding micro-undertakings – with securities admitted to trading on an EU regulated 
market are subject to the sustainability reporting requirements set out in that Directive, 
regardless  of their legal  form.  Considering that the  scope of  individual  sustainability 
reporting should be reduced to large undertakings with an average of more than 1000 
employees during the financial year, that reduction in scope should also apply to credit 
institutions and insurance undertakings.  

The European Financial Stability Facility (EFSF) established by the EFSF Framework 
Agreement  is  subject  to the sustainability  reporting  requirements  set  out in  Directive 
2013/34/EU, although it is exempted from the sustainability reporting regime set out 
in Directive 2004/109/EC of the European Parliament and of the Council29 pursuant to 
Article 8 of that Directive. Despite it being a large undertaking incorporated in a legal 
form  listed  in  Annex  I  to  Directive  2013/34/EU,  the  EFSF  has  a  mandate  -  i.e.  to 
safeguard financial stability in the Union by providing temporary financial assistance 
to Member States whose currency is the euro – that is largely similar to the one of the 
European Stability Mechanism (ESM), which is not subject to sustainability reporting 
requirements. For the EFSF to benefit from the same treatment as the ESM as regards 
sustainability  reporting,  and  for  consistency  with  the  exemption  regime  provided  by 
Directive  2004/109/EC,  the  EFSF  should  be  exempted  from  the  regime  on 
sustainability reporting provided by Directive 2013/34/EU.  

Article  19a(3)  of  Directive  2013/34/EU  requires  undertakings  to  report  information 
about  the  undertaking’s  own  operations  and  about  its  value  chain.  It  is  necessary  to 
reduce the reporting burden for undertakings in the value chain that are not required to 
report on their sustainability. The reporting undertaking, for the purposes of reporting 
sustainability  information  at  individual  or  at  consolidated  level,  as  required  by 
Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due 
diligence process, should therefore not seek to obtain from undertakings established in 
or outside of the Union in its value chain that have up to 1000 employees on average 
during the financial year any information that goes beyond the information specified in 
the standards for voluntary use by undertakings that are not required to report on their 
sustainability. The reporting undertaking should, however, be allowed to collect from 
such  undertakings  in  its  value  chain  any  additional  sustainability  information  that  is 
commonly  shared  between  undertakings  in  the  sector  concerned.  Undertakings 
reporting on their value chain in accordance with those limitations should be deemed 
to  comply  with  the  obligation  to  report  on  their  sustainability.  Assurance  providers 

29 

Directive  2004/109/EC  of  the  European  Parliament  and  of  the  Council  of  15  December  2004  on  the 
harmonization of transparency requirements in relation to information about issuers whose securities are 
admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 39, 31.12.2004, p. 
38, ELI: http://data.europa.eu/eli/dir/2004/109/oj). 

EN 

23 

  EN 

 
 
should prepare their assurance opinion respecting the obligation on undertakings not to 
seek to obtain from undertakings in their value chain that have up to 1000 employees 
on average during the financial year any information that goes beyond the information 
specified  in  the  standards  for  voluntary  use  by  undertakings  that  are  not  required  to 
report on their sustainability. For that purpose, the Commission should be empowered 
to adopt a delegated act to provide for sustainability reporting standards for voluntary 
use  by  undertakings  that  are  not  required  to  report  on  their  sustainability.  Those 
standards  should  be  proportionate  to,  and  relevant  for,  the  capacities  and  the 
characteristics of those undertakings and to the scale and complexity of their activities. 
Those standards should also specify, where possible, the structure to be used to present 
that information.  

(10)  Article 29c(1) of Directive 2013/34/EU allows small and medium-sized undertakings 
with securities admitted to trading on an EU regulated market, small and non-complex 
institutions and captive re(insurance) undertakings, to report sustainability information 
in  accordance  with  the  limited  set  of  standards  to  be  adopted  by  the  Commission. 
Considering  that  small  and  medium-sized  undertakings  with  securities  admitted  to 
trading  on an EU regulated market  should  be excluded from  sustainability  reporting, 
the  empowerment  for  the  Commission  to  adopt  delegated  acts  to  provide  for 
sustainability  reporting  standards  for  those  small  and  medium-sized  undertakings 
should be removed.  

(11)  Article 19a(7) of Directive 2013/34/EU allows small and medium-sized undertakings 
with  securities  admitted  to  trading  on  an  EU  regulated  market  to  opt  out  from 
sustainability  reporting  for  the  first  two  years  of  application  of  those  requirements. 
Considering  that  small  and  medium-sized  undertakings  should  be  excluded  from  the 
sustainability  reporting,  the  provision  allowing  for  the  two-year  opt  out  should  be 
removed. 

(12)  Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to 
prepare  and  publish  a  sustainability  statement  at  consolidated  level.  To  reduce  the 
reporting burden on those parent undertakings, the scope of that obligation should be 
reduced  to  parent  undertakings  of  large  groups  with  an  average  of  more  than  1000 
employees, on a consolidated basis, during the financial year.  

(13)  Article 29b(1), third subparagraph, Directive 2013/34/EU empowers the Commission 
to adopt sector-specific reporting standards by way of delegated acts, with a first set of 
such standards to be adopted by 30 June 2026. To avoid an increase in the number of 
prescribed  datapoints  that  undertakings  should  report,  that  empowerment  should  be 
removed.   

(14)  Article 29b(4) of  Directive 2013/34/EU  requires  sustainability  reporting standards  to 
not specify disclosures requiring undertakings to obtain from small and medium-sized 
undertakings in their value chain any information that goes beyond the information to 
be disclosed pursuant to the sustainability reporting standards for small and medium-
sized  undertakings  with  securities  admitted  to  trading  on  an  EU  regulated  market. 
Considering  that  small  and  medium-sized  undertakings  with  securities  admitted  to 
trading  on an EU regulated market  should  be excluded from  sustainability  reporting, 
and in order to reduce the reporting burden for undertakings in the value chain that are 
not  required  to  report  on  their  sustainability,  the  sustainability  reporting  standards 
should  not  specify  disclosures  requiring  undertakings  to  obtain  from  undertakings  in 
their value chain that have up to 1000 employees on average during the financial year 
any  information  that  goes  beyond  the  information  to  be  disclosed  pursuant  to  the 

EN 

24 

  EN 

 
sustainability  reporting  standards  for  voluntary  use  by  undertakings  that  are  not 
required to report on their sustainability.  

(15)  Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements 
in  Articles  19a  and  29a  of  that  Directive  to  prepare  their  management  report,  or 
consolidated management report, where applicable, in the electronic reporting format 
specified  in  Article  3  of  Commission  Delegated  Regulation  (EU)  2019/81530  and  to 
mark up their sustainability reporting, including the disclosures provided for in Article 
8  of  Regulation  (EU)  2020/852  of  the  European  Parliament  and  of  the  Council31,  in 
accordance  with  the  electronic  reporting  format  to  be  specified  in  that  Delegated 
Regulation.  To  provide  clarity  to  undertakings,  it  should  be  specified  that  until  such 
rules  on  the  marking  up  are  adopted  by  way  of  that  a  Delegated  Regulation,  for  the 
marking  up  of  sustainability  reporting  is  adopted,  undertakings  are  should  not  be 
required to mark-up their sustainability reporting. 

(16)  Article  33(1)  of  Directive  2013/34/EU  specifies 

that 

the  members  of 

the 
administrative, management and supervisory bodies of an undertaking have collective 
responsibility for ensuring that the following documents are drawn up and published in 
accordance  with  the  requirements  of  that  Directive.  To  provide  flexibility  do  for 
undertakings  and  reduce  their  reporting  burden,  it  should  be  specified  that  the 
collective  responsibility  of  the  members  of  the  administrative,  management  and 
supervisory bodies of an undertaking for compliance with the requirements of Article 
29d of that Directive as regards the digitalisation of the management report is limited 
to  its  publication  in  the  single  electronic  format,  including  the  marking  up  of  the 
sustainability reporting therein.  

(17)  Pursuant  to  Article 40a(1), fourth  and fifth  subparagraph of Directive 2013/34/EU, a 
subsidiary in the Union of a third-county undertaking that generates a net turnover of 
more  than  EUR  150  million  in  the  Union,  or,  in  the  absence  of  such  subsidiary,  a 
branch in the Union that generates a net turnover of more than EUR 40 million, is to 
publish and make accessible sustainability information at the group level of the third-
country parent undertaking. To reach closer alignment with the criteria used to define 
which  undertakings  are  in  the  scope  of  Directive  (EU)  2024/1760,  the  net  turnover 
threshold for the third-country undertaking should be raised from EUR 150 000 000 to 
EUR  450 000 000.  For  reasons  of  consistency  and  burden  reduction,  the  size  for  a 
subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. 
The size of the subsidiary undertaking should be that of a large undertaking, whilst the 
net  turnover  criteria  for  the  branch  should  be  raised  from  EUR  40 000 000  to  EUR 
50 000 000, to align with the net turnover threshold for large undertakings.  

(18)  Article  5(2),  first  subparagraph,  of  Directive  (EU)  2022/2464  specifies  the  dates  by 
which the Member States are to apply the sustainability reporting requirements set out 
in Directive 2013/34/EU, with different dates depending on the size of the undertaking 
concerned.  Considering  that  the  scope  of  the  individual  sustainability  reporting 
requirements  should  be  reduced  to  include  only  large  undertakings  with  more  than 

30 

31 

Commission  Delegated  Regulation  (EU)  2018/815  of  17  December  2018  supplementing  Directive 
2004/109/EC  of  the  European  Parliament  and  of  the  Council  with  regard  to  regulatory  technical 
standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1, ELI: 
http://data.europa.eu/eli/reg_del/2019/815/oj). 
Regulation  (EU)  2020/852  of  the  European  Parliament  and  of  the  Council  of  18  June  2020  on  the 
establishment  of  a  framework  to  facilitate  sustainable  investment,  and  amending  Regulation  (EU) 
2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).  

EN 

25 

  EN 

 
 
1000  employees  on  average  during  the  financial  year,  and  that  the  scope  of  the 
consolidated sustainability reporting requirements should be reduced accordingly, the 
criteria for determining the dates of application should be adjusted, and the reference 
to small and medium-sized undertakings with securities admitted to trading on an EU 
regulated market should be removed.  

(19)  Article  5(2),  third  subparagraph,  of  Directive  (EU)  2022/2464  specifies  the  dates  by 
which the Member States are to apply the sustainability reporting requirements set out 
in  Directive  2004/109/EC,  with  different  dates  depending  on  the  size  of  the  issuer 
concerned.  Considering  that  the  scope  of  the  individual  sustainability  reporting 
requirements  should  be  reduced  to  include  only  large  undertakings  with  more  than 
1000  employees  on  average  during  the  financial  year,  and  that  the  scope  of  the 
consolidated sustainability reporting requirements should be reduced accordingly, the 
criteria for determining the dates of application should be adjusted, and the reference 
to small and medium-sized undertakings should be removed.  

(20)  Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing, 
in their national law, provisions within the field covered by the Directive laying down 
human  rights  and  environmental  due  diligence  obligations  diverging  from  those  laid 
down  in  Article  8(1)  and  (2),  and  Article  10(1)  of  that  Directive.  To  ensure  that 
Member  States  do  not  go  beyond  that  Directive  and  to  avoid  the  creation  of  a 
fragmented  regulatory  landscape  resulting  in  legal  uncertainty  and  unnecessary 
burden,  the  full  harmonisation  provisions  of  Directive  (EU)  2024/1760  should  be 
expanded  to  additional  provisions  regulating  the  core  aspects  of  the  due  diligence 
process.  That  includes,  in  particular,  the  identification  duty,  the  duties  to  address 
adverse  impacts  that  have  been  or  should  have  been  identified,  the  duties  to  engage 
with  stakeholders  in  certain  cases,  and  the  duty  to  provide  for  a  complaints  and 
notification  mechanism.  At  the  same  time,  Member  States  should  be  allowed  to 
introduce  more  stringent  or  more  specific  provisions  on  other  aspects,  including    to 
address emerging risks linked to new products or services.  

(21)  Article  5  of  Directive  (EU)  2024/1760  obliges  Member  States  to  ensure  that  large 
companies  above  a  certain  size  conduct  risk-based  human  rights  and  environmental 
due  diligence.  To  reduce  burdens  on  companies  that  have  to  comply  with  that 
obligation,  the  required  due  diligence  should,  as  a  general  rule,  be  limited  to  the 
company’s  own  operations,  those  of  its  subsidiaries  and  those  of  its  direct  business 
partners (‘tier 1’). Consequently, when it comes to business relationships, companies 
should, after having mapped their chains of activities, be required to carry out in-depth 
assessments  as  regards  direct  business  partners  only.  Companies  should,  however, 
look beyond their direct business relationships where they have plausible information 
that suggests an adverse impact at the level of an indirect business partner.  Plausible 
information  means  information  of  an  objective  character  that  allows  the  company  to 
conclude that there is a reasonable likelihood that the information is true. This may be 
the case where the company concerned has received a complaint or is in the possession 
of information, for example through credible media or NGO reports, reports of recent  
incidents,  or  through  recurring  problems  at  certain  locations    about  likely  or  actual 
harmful activities at the level of an indirect  business partner.  Where the company has 
such information, it should carry out an in-depth assessment. Companies should also 
carry  out  in-depth  assessments  with  respect  to  adverse  impacts  arising  beyond  their 
direct business partner where the structure of this business relationship lacks economic 
rationale and suggests that it was chosen to remove an otherwise direct supplier with 
harmful  activities  from  the  purview  of  the  company.  Where  the  in-depth  assessment 

EN 

26 

  EN 

 
confirms the likelihood or existence of the adverse impact, it should then be deemed to 
be identified. In addition, companies should seek to ensure that their code of conduct – 
which is part of their due diligence policy and sets out the expectations as to how to 
protect human, including labour, rights and the environment in business operations – is 
followed  throughout  the  chain  of  activities  in  accordance  with  contractual  cascading 
and SME support.  

(22)  To  limit  the  trickle-down  effect  on  small  and  medium-sized  undertakings  and  small 
midcap  companies  when  it  comes  to  mapping  the  value  chain    to  identify  adverse 
impacts,  large  companies  should  limit  information  requests  to  the  information 
specified in the standards for voluntary use referred to in Article 29a of Directive (EU) 
2013/34/EU,  unless  they  need  additional  information  to  carry  out  the  mapping  and 
they cannot obtain that information in any other reasonable way.  

(23)  Companies may find themselves in situations where their production heavily relies on 
inputs  from  one  or  several  specific  suppliers.  At  the  same  time,  where  the  business 
operations  of  such  a  supplier  are  linked  to  severe  adverse  impacts,    including  child 
labour  or  significant  environmental  harm,  and  the  company  has  unsuccessfully  
exhausted all due diligence measures to address those impacts, the company, as a last 
resort  should  suspend  the  business  relationship  while  continuing  to  work  with  the 
supplier  towards  a  solution,  where  possible  using  any  increased  leverage  resulting 
from the suspension.   

to  engage  with  workers, 

(24)  To  reduce  burdens  on  companies  and  make  stakeholder  engagement  more 
their 
proportionate,  companies  should  only  have 
representatives including trade unions, and individuals and communities whose rights 
or interests are or could be directly affected by the products, services and operations of 
the  company,  its  subsidiaries  and  its  business  partners,  and  that  have  a  link  to  the 
specific stage of the due diligence process being carried out. That includes individuals 
or  communities  in  the  neighbourhood  of  plants  operated  by  business  partners  where 
those  individuals  or  communities  are  directly  affected  by  pollution,  or  indigenous 
people  whose  right  to  lands  or  resources  are  directly  affected  by  how  a  business 
partner  acquires,  develops  or  otherwise  uses  land,  forests  or  waters.  Moreover, 
stakeholder engagement should only be required for certain parts of the due diligence 
process,  namely at  the identification stage, for the development  of (enhanced) action 
plans and when designing remediation measures. 

(25)  To  reduce  administrative  burdens  on  companies,  the  Commission’s  deadline  for  the 
adoption of general due diligence guidelines should be advanced to 26 July 2026. In 
parallel,  the  application  deadline for  Directive (EU) 2024/1760  for the first group of 
companies  should  be  deferred  to  26  July  2028  in  accordance  with  Directive  (EU) 
XXX/XXX32.  That  two-year  interval  will  should  provide  companies  with  sufficient 
time  to  take  into  account  the  practical  guidance  and  best  practices  included  in  the 
Commission’s guidelines when implementing due diligence measures.  

(26)  To  ensure  better  alignment  of  Directive  (EU)  2024/1760  with  the  sustainability 
reporting regime laid down in Directive (EU) 2022/2464, the requirement to put into 
effect  the  transition  plan  for  climate  change  mitigation  should  be  replaced  by  a 
clarification  that  the  obligation  of  companies  to  adopt  a  transition  plan  includes 
outlining  implementing  actions,  planned  and  taken.  The  obligation  to  adopt  the  plan 
and its initial and updated design remains subject to administrative supervision.  

32 

Directive (EU) 2025/XX of ………. 

EN 

27 

  EN 

 
 
(27)  Article  27(1)  of  Directive  EU  2024/1760  requires  Member  States  to  lay  down 
penalties that are to be “effective, proportionate and dissuasive”. Article 27(2) of that 
Directive requires Member States, when deciding whether to impose penalties and, if 
so, when determining their nature and appropriate level, to take due account of a series 
of factors that determine the gravity of the infringement and attenuating or aggravating 
circumstances.  Article  27(4)  of  that  Directive  requires  Member  States  to  base  any 
imposed pecuniary penalties on the net worldwide turnover of the company concerned. 
However,  given  the  fact  that  Member  States  already  have  to  take  into  account  the 
series of factors laid down in Article 27(2) of that directive, the need to base pecuniary 
penalties  on  the  net  worldwide  turnover  of  the  company  concerned  is  superfluous.  
However, to ensure a level playing field across the Union, Member States should be 
prohibited  from  introducing  in  their  national  law  a  ceiling  or  cap  for  any  pecuniary 
penalties  imposed  on  companies  under  their  jurisdiction  that  would  prevent 
supervisory  authorities  from  imposing  penalties  in  accordance  with  the  factors  laid 
down  in  Article  27(2).  Moreover,  to  harmonise  enforcement  practices  across  the 
Union,  the  Commission,  in  collaboration  with  the  Member  States,  should  develop 
guidelines to assist supervisory authorities in determining the level of penalties.  

(28)  To  limit  possible  litigation  risks  linked  to  the  harmonised  civil  liability  regime  of 
Directive  (EU)  2024/1760,  the  specific,  Union-wide  liability  regime  currently 
provided for in Article 29(1) of that Directive should be removed. At the same time, as 
a  matter  of  both  international  and  Union  law,  Member  States  should  be  required  to 
ensure that victims of adverse impacts have effective access to justice and to guarantee 
their  right  to  an  effective  remedy,  as  enshrined  in  Article  2(3)  of  the  International 
Covenant  on  Civil  and  Political  Rights,  Article  8  of  the  Universal  Declaration  of 
Human  Rights,  Article  9(3)  of  the  Convention  on  Access  to  Information,  Public 
Participation  in  Decision-making  and  Access  to  Justice  in  Environmental  Matters 
(Aarhus  Convention)  and  Article  47  of  the  EU  Charter  of  Fundamental  Rights. 
Member  States  should  therefore  ensure  that,  in  case  a  company  is  held  liable  for  a 
failure  to  comply  with  the  due  diligence  requirements  laid  down  in  Directive  (EU) 
2024/1760, and that where such failure caused damage, victims are able to receive full 
compensation,  which  should  be  granted  in  accordance  with  the  principles  of 
effectiveness and equivalence, while balancing this through safeguards should prevent 
against  overcompensation.  In  view  of  the  different  rules  and  traditions  that  exist  at 
national  level  when  it  comes  to  allowing  representative  actions,  the  specific 
requirement  in  that  regard  in  Directive  (EU)  2024/1760  should  be  deleted.  Such 
deletion is without prejudice to any provision of the applicable national law allowing a 
trade union, non-governmental human rights or environmental organisation, other non-
governmental  organisation  or  a  national  human  rights  institution  to  bring  actions  to 
enforce  the  rights  of  the  alleged  injured  party,  or  to  support  such  actions  brought 
directly by such party. Furthermore, for the same reason, the requirement for Member 
States to ensure that the liability rules are of overriding mandatory application in cases 
where the law applicable to claims to that effect is not the national law of the Member 
State  should  be  deleted.  That  deletion  does  not  restrict  the  possibility  for  Member 
States to provide that the provisions of national law transposing Article 29 of Directive 
EU 2024/1760 are of overriding mandatory application in accordance with Article 16 
of Regulation (EC) No 864/2007, in cases where the law applicable to claims to that 
effect is not the national law of a Member State. 

(29)  Article 36(1) of Directive (EU) 2024/1760 requires the Commission to submit  by no 
later than 26 July 2026 a report to the European Parliament and to the Council on the 
necessity of laying down additional sustainability due diligence requirements tailored 

EN 

28 

  EN 

 
to regulated financial undertakings with respect to the provision of financial services 
and  investment  activities,  and  the  options  for  such  due  diligence  requirements  and 
their impacts. As that review clause does not leave any time to take into account the 
experience with the newly established, general due diligence framework, it should be 
removed. 

(30)  Since the objectives of this Directive cannot be sufficiently achieved by the Member 
States but can rather, by reason of the scale or effects of the action, be better achieved 
at  Union  level,  the  Union  may  adopt  measures,  in  accordance  with  the  principle  of 
subsidiarity  as  set  out  in  Article  5  of  the  Treaty  on  European  Union.  In  accordance 
with the principle of proportionality as set out in that Article, this Directive does not 
go beyond what is necessary in order to achieve those objectives. 

(31)  Directive 2006/43/EC, Directive 2013/34/EU, Directive (EU) 2022/2464 and Directive 

(EU) 2024/1760 should therefore be amended accordingly, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 

Amendments to Directive 2006/43/EC 

Directive 2006/43/EC is amended as follows: 

(1) 

in Article 26a, paragraph 3 is replaced by the following: 

‘3.  The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 
with Article 48a in order to supplement this Directive in order to provide for limited 
assurance  standards  setting  out  the  procedures  that  the  auditor(s)  and  the  audit 
firm(s) shall perform in order to draw his, her or its conclusions on the assurance of 
sustainability  reporting,  including  engagement  planning,  risk  consideration  and 
response to  risks  and type of  conclusions to  be  included in  the  assurance report on 
sustainability reporting, or, where relevant, in the audit report. 

The  Commission  may  adopt  the  assurance  standards  referred  to  in  the  first 
subparagraph only where those standards: 

(a) 

(b) 

have  been  developed  with  proper  due  process,  public  oversight  and 
transparency; 

contribute a high level of credibility and quality to the annual or consolidated 
sustainability reporting; and 

(c) 

are conducive to the Union public good.’; 

(2) 

in Article 48a(2), the second subparagraph is replaced by the following: 

‘The power to adopt delegated acts referred to in Article 26a(3) shall be conferred on 
the Commission for an indeterminate period of time.’. 

Article 2 

Amendments to Directive 2013/34/EU 

Directive 2013/34/EU is amended as follows: 

(1) 

Article 1 is amended as follows: 

EN 

29 

  EN 

 
(a) 

in paragraph 3, the introductory wording is replaced by the following: 

‘The coordination measures prescribed by Articles 19a, 19b, 29a, 29aa, 29d, 30 
and  33,  Article  34(1),  second  subparagraph,  point  (aa),  Article  34(2)  and  (3), 
and  Article  51  of  this  Directive  shall  also  apply  to  the  laws,  regulations  and 
administrative  provisions  of  the  Member  States  relating  to  the  following 
undertakings  regardless  of  their  legal  form,  provided  that  those  undertakings 
are large undertakings which, on their balance sheet dates, exceed the average 
number of 1000 employees  during the financial year:’; 

(b)  paragraph 4 is replaced by the following: 

‘4. 
The  coordination  measures  prescribed  by  Articles  19a,  29a  and  29d 
shall not apply to the European Financial Stability Facility (EFSF) established 
by the EFSF Framework Agreement nor to financial products listed in Article 
2,  point  (12),  (b)  and  (f)  of  Regulation  (EU)  2019/2088  of  the  European 
Parliament and of the Council*. 

_____________________________________________ 

* Regulation (EU) 2019/2088 of the European Parliament and of the Council of 
27  November  2019  on  sustainability-related  disclosures  in  the  financial 
ELI: 
317, 
services 
http://data.europa.eu/eli/reg/2019/2088/oj).’; 

9.12.2019, 

sector 

(OJ 

1, 

p. 

L 

(2) 

Article 19a is amended as follows: 

(a) 

in paragraph 1, the first subparagraph is replaced by the following: 

‘Large  undertakings  which,  on  their  balance  sheet  dates,  exceed  the  average 
number  of  1000  employees  during  the  financial  year  shall  include  in  their 
management  report  information  necessary  to  understand  the  undertaking’s 
impacts on sustainability matters, and information necessary to understand how 
sustainability  matters  affect  the  undertaking’s  development,  performance  and 
position.’; 

(b)  paragraph 3 is amended as follows: 

(i) 

the first subparagraph is replaced by the following: 

‘Where applicable, the information referred to in paragraphs 1 and 2 shall 
contain information about the undertaking’s own operations and about its 
value chain, including its products and services, its business relationships 
and its supply chain. Member States shall ensure that, for the reporting of 
sustainability information as required by this Directive, undertakings do 
not seek to obtain from undertakings in their value chain which, on their 
balance  sheet  dates,  do  not  exceed  the  average  number  of  1000 
employees  during  the  financial  year    any  information  that  exceeds  the 
information  specified  in  the  standards  for  voluntary  use  referred  to  in 
Article  29ca,  except  for  additional  sustainability  information  that  is 
commonly  shared  between  undertakings  in  the  sector  concerned. 
Undertakings  that  report  the  necessary  value  chain  information  without 
reporting from undertakings in their value chain which, on their balance 
sheet dates, do not exceed the average number of 1000 employees during 
the financial year  any information that exceeds the information specified 
in the standards for voluntary use referred to in Article 29ca, except for 
additional  sustainability  information  that  is  commonly  shared  between 

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30 

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undertakings in the sector concerned, shall be deemed to have complied 
with  the  obligation  to  report  value  chain  information  set  out  in  this 
paragraph.’;  

(ii) 

the following subparagraph is added: 

‘The  first  subparagraph  is  without  prejudice  to  Union  requirements  on 
undertakings to conduct a due diligence process.’; 

(c)  paragraphs 6 and 7 are deleted; 

(3) 

the following Article 19b is inserted: 

‘Article 19b 

Optional taxonomy reporting for certain undertakings 

1.  Member  States  shall  ensure  that,  by  way  of  derogation  from  Article  8  of 
Regulation  (EU)  2020/852,  undertakings  as  referred  to  in  Article  19a(1)  of  this 
Directive which, on their balance sheet dates, do not exceed  a net turnover of EUR 
450 000 000 during the financial year shall apply the  paragraphs  2, 3 and 4 of this 
Directive. 

2. 
An undertaking as referred to in paragraph 1 that claims that its activities are 
associated with economic activities that qualify as environmentally sustainable under 
Articles 3 and 9 of Regulation (EU) 2020/852 or with economic activities that fulfil 
only  certain  requirements  of  that  provision  shall  include  in  its  management  report 
information  on  how  and  to  what  extent  its  activities  are  associated  with  those 
economic activities.  

In  particular,  a  non-financial  undertaking  that  claims  that  its  activities  are 
3. 
associated with economic activities that qualify as environmentally sustainable under 
Articles 3 and 9 of Regulation (EU) 2020/852 shall disclose the following indicators:  

(a) 

(b) 

the proportion of its turnover derived from products or services associated with 
economic activities that qualify as environmentally sustainable under Articles 3 
and 9 of that Regulation;  

the  proportion  of  its  capital  expenditure  related  to  assets  or  processes 
associated with economic activities that qualify as environmentally sustainable 
under Articles 3 and 9 of that Regulation. 

A  non-financial  undertaking  that  discloses  the  indicators  referred  to  in  the  first 
subparagraph  may  disclose  the  proportion  of  its  operating  expenditure  related  to 
assets  or  processes  associated  with  economic  activities 
that  qualify  as 
environmentally sustainable under Articles 3 and 9 of Regulation (EU) 2020/852. 

In  particular,  a  non-financial  undertaking  that  claims  that  its  activities  are 
4. 
associated with economic activities that fulfil only certain requirements of Article 3 
of Regulation (EU) 2020/852 shall disclose the following indicators: 

(a) 

(b) 

the proportion of its turnover derived from products or services associated with 
economic  activities  fulfilling  only  certain  requirements  of  Article  3  of  that 
Regulation; 

the  proportion  of  its  capital  expenditure  related  to  assets  or  processes 
associated  with  economic  activities  that  fulfil  only  certain  requirements  of 
Article 3 of that Regulation; 

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A  non-financial  undertaking  that  discloses  the  indicators  referred  to  in  the  first 
subparagraph  may  disclose  the  proportion  of  its  operating  expenditure  related  to 
assets  or  processes  associated  with  economic  activities  that  fulfil  only  certain 
requirements of Article 3 of Regulation (EU) 2020/852. 

The Commission shall adopt a delegated act in accordance with Article 49 of 
5. 
this  Directive  to  supplement  paragraphs  1,  2,  3  and  4  of  this  Article  to  specify  the 
content  and  presentation  of  the  information  to  be  disclosed  pursuant  to  those 
paragraphs, including the content of the information concerning economic activities 
that  fulfil  only  certain  of  the  criteria  set  out  in  Article  3  of  Regulation  (EU) 
2020/852, and the methodology to be used in order to comply with them, taking into 
account  the  specificities  of  both  financial  and  non-financial  undertakings  and  the 
technical screening criteria established pursuant to that Regulation.’; 

(4) 

Article 29a is amended as follows: 

(a) 

in paragraph 1, the first subparagraph is replaced by the following: 

‘Parent  undertakings  of  a  large  group  which,  on  their  balance  sheet  dates, 
exceed the average number of 1000 employees, on a consolidated basis, during 
the  financial  year,  shall  include  in  the  consolidated  management  report 
information  necessary  to  understand  the  group’s  impacts  on  sustainability 
matters,  and  information  necessary  to  understand  how  sustainability  matters 
affect the group’s development, performance and position.’; 

(b)  paragraph 3 is amended as follows: 

(i) 

the first subparagraph is replaced by the following: 

‘Where applicable, the information referred to in paragraphs 1 and 2 shall 
contain information about the group’s own operations and about its value 
chain,  including  its products  and services,  its  business  relationships  and 
its  supply  chain.  Member  States  shall  ensure  that,  for  the  reporting  of 
sustainability information as required by this Directive, undertakings do 
not seek to obtain from undertakings in their value chain which, on their 
balance  sheet  dates,  do  not  exceed  the  average  number  of    1000 
employees  during  the  financial  year  any  information  that  exceeds  the 
information  specified  in  the  standards  for  voluntary  use  referred  to  in 
Article  29ca,  except  for  additional  sustainability  information  that  is 
commonly  shared  between  undertakings  in  the  sector  concerned. 
Undertakings  that  report  the  necessary  value  chain  information  without 
reporting from undertakings in their value chain which, on their balance 
sheet dates, do not exceed the average number of 1000 employees during 
the financial year any information that exceeds the information specified 
in the standards for voluntary use referred to in Article 29ca, except for 
additional  sustainability  information  that  is  commonly  shared  between 
undertakings in the sector concerned, shall be deemed to have complied 
with  the  obligation  to  report  value  chain  information  set  out  in  this 
paragraph.’; 

(ii) 

the following subparagraph is added: 

‘The  first  subparagraph  is  without  prejudice  to  Union  requirements  on 
undertakings to conduct a due diligence process.’; 

(5) 

the following Article 29aa is inserted: 

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Optional taxonomy reporting for certain parent undertakings 

‘Article 29aa 

1.  Member  States  shall  ensure  that,  by  way  of  derogation  from  Article  8  of 
Regulation  (EU)  2020/852,  parent  undertakings  as  referred  to  in  Article  29a(1)  of 
this  Directive  which,  on  their  balance  sheet  dates,  do  not  exceed  a  net  turnover  of 
EUR 450 000 000, on a consolidated basis, during the financial year shall apply the 
paragraphs 2, 3 and 4 of this Directive. 

A parent undertaking as referred to in paragraph 1 that claims that its activities 
2. 
are  associated  with  economic  activities  that  qualify  as  environmentally  sustainable 
under Articles 3 and 9 of Regulation (EU) 2020/852 or with economic activities that 
fulfil  only  certain  requirements  of  that  provision  shall  include  in  its  management 
report information on how and to what extent its activities are associated with those 
economic activities.  

In  particular,  a  non-financial  parent  undertaking  that  claims  that  its  activities 
3. 
are  associated  with  economic  activities  that  qualify  as  environmentally  sustainable 
under  Articles  3  and  9  of  Regulation  (EU)  2020/852  shall  disclose  the  following 
indicators:  

(a) 

(b) 

the proportion of its turnover derived from products or services associated with 
economic activities that qualify as environmentally sustainable under Articles 3 
and 9 of that Regulation;  

the  proportion  of  its  capital  expenditure  related  to  assets  or  processes 
associated with economic activities that qualify as environmentally sustainable 
under Articles 3 and 9 of that Regulation. 

A non-financial parent undertaking that discloses the indicators referred to in the first 
subparagraph  may  disclose  the  proportion  of  its  operating  expenditure  related  to 
assets  or  processes  associated  with  economic  activities 
that  qualify  as 
environmentally sustainable under Articles 3 and 9 of that Regulation. 

4. 
In  particular,  a  non-financial  parent  undertaking  that  claims  that  its  activities 
are associated with economic activities that fulfil only certain requirements of Article 
3 of Regulation (EU) 2020/852 shall disclose the following indicators: 

(a) 

(b) 

the proportion of its turnover derived from products or services associated with 
economic  activities  fulfilling  only  certain  requirements  of  Article  3  of  that 
Regulation; 

the  proportion  of  its  capital  expenditure  related  to  assets  or  processes 
associated  with  economic  activities  that  fulfil  only  certain  requirements  of 
Article 3 of that Regulation; 

A non-financial parent undertaking that discloses the indicators referred to in the first 
subparagraph  may  disclose  the  proportion  of  its  operating  expenditure  related  to 
assets  or  processes  associated  with  economic  activities  that  fulfil  only  certain 
requirements of Article 3 of that Regulation. 

5. 
The Commission shall adopt a delegated act in accordance with Article 49 of 
this  Directive  to  supplement  paragraphs  1,  2,  3  and  4  of  this  Article  to  specify  the 
content  and  presentation  of  the  information  to  be  disclosed  pursuant  to  those 
paragraphs, including the content of the information concerning economic activities 
that  fulfil  only  certain  of  the  criteria  set  out  in  Article  3  of  Regulation  (EU) 

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33 

  EN 

 
2020/852, and the methodology to be used in order to comply with them, taking into 
account  the  specificities  of  both  financial  and  non-financial  undertakings  and  the 
technical screening criteria established pursuant to this Regulation.’; 

(6) 

Article 29b is amended as follows: 

(a) 

(b) 

in paragraph 1, the third and fourth subparagraphs are deleted; 

in  paragraph  4,  first  subparagraph,  the  last  sentence  is  replaced  by  the 
following: 

‘Sustainability  reporting  standards  shall  not  specify  disclosures  that  would 
require undertakings to obtain from undertakings in their value chain which, on 
their balance sheet dates, do not exceed the average number of1000 employees 
during  the  financial  year  any  information  that  exceeds  the  information  to  be 
disclosed  pursuant  to  the  sustainability  reporting  standards  for  voluntary  use 
referred to in Article 29ca.’; 

(7) 

(8) 

Article 29c is deleted; 

the following Article 29ca is inserted: 

‘Article 29ca 

Sustainability reporting standards for voluntary use 

1. 
To facilitate voluntary reporting of sustainability information by undertakings 
other  than  those  referred  to  in  Articles  19a(1)  and  29a(1),  the  Commission  shall 
adopt  a  delegated  act  by  [4  months  after  entry  into  force  of  this  Directive]  in 
accordance with Article 49 supplementing this Directive to provide for sustainability 
reporting standards for voluntary use by such undertakings. 

2. 
The  sustainability  reporting  standards  referred  to  in  paragraph  1  shall  be 
proportionate  to  and  relevant  for  the  capacities  and  the  characteristics  of  the 
undertakings  for  which  they  are  designed  and  to  the  scale  and  complexity  of  their 
activities. They shall also, to the extent possible, specify the structure to be used to 
present such sustainability information.’; 

(9) 

Article 29d is replaced by the following:  

‘Article 29d 

Single electronic reporting format 

1. 
Undertakings subject to the requirements of Article 19a of this Directive shall 
prepare  their  management  report  in  the  electronic  reporting  format  specified  in 
Article  3  of  Commission  Delegated  Regulation  (EU)  2019/815*  and  shall  mark  up 
their  sustainability  reporting,  including  the  disclosures  provided  for  in  Article  8  of 
Regulation (EU) 2020/852, in accordance with the electronic reporting format to be 
specified  in  that  Delegated  Regulation.  Until  such  rules  on  the  marking  up  are 
adopted by way of that  Delegated Regulation, undertakings shall not be required to 
markup their sustainability reporting. 

2. 
Parent  undertakings  subject  to  the  requirements  of  Article  29a  shall  prepare 
their consolidated management report in the electronic reporting format specified in 
Article  3  of  Delegated  Regulation  (EU)  2019/815  and  shall  mark  up  their 

EN 

34 

  EN 

 
sustainability  reporting,  including  the  disclosures  provided  for  in  Article  8  of 
Regulation (EU) 2020/852, in accordance with the electronic reporting format to be 
specified  in  that  Delegated  Regulation.  Until  such  rules  on  the  marking  up  are 
adopted  by  way  of  that  Delegated  Regulation,  parent  undertakings  shall  not  be 
required to markup their sustainability reporting.; 

_____________________________________________ 

*  Commission  Delegated  Regulation  (EU)  2018/815  of  17  December  2018 
supplementing  Directive  2004/109/EC  of  the  European  Parliament  and  of  the 
Council with regard to regulatory technical standards on the specification of a single 
electronic 
1,  ELI: 
http://data.europa.eu/eli/reg_del/2019/815/oj).’;  

29.5.2019, 

reporting 

(OJ  L 

format 

143, 

p. 

(10) 

in Article 33, paragraph 1 is replaced by the following: 

‘1.  Member  States  shall  ensure  that  the  members  of  the  administrative, 
management  and  supervisory  bodies  of  an  undertaking,  acting  within 
the 
competences  assigned  to  them  by  national  law,  have  collective  responsibility  for 
ensuring  that  the  following  documents  are  drawn  up  and  published  in  accordance 
with the requirements of this Directive and, where applicable, with the international 
accounting  standards  adopted  pursuant  to  Regulation  (EC)  No  1606/2002,  with 
Delegated  Regulation  (EU)  2019/815,  with  the  sustainability  reporting  standards 
referred to in Article 29b of this Directive, and with the requirements of Article 29d 
of this Directive: 

(a) 

(b) 

the  annual  financial  statements,  the  management  report  and  the  corporate 
governance statement when provided separately; and 

the consolidated financial statements, the consolidated management reports and 
the consolidated corporate governance statement when provided separately. 

By  way  of  derogation  from  subparagraph  1,  Member  States  shall  ensure  that  the 
members  of  the  administrative,  management  and  supervisory  bodies  of  an 
undertaking, acting within the competences assigned to them by national law, do not 
have  collective  responsibility  for  ensuring  that  the  management  report,  or 
consolidated  management  report,  where  applicable,  is  prepared  in  accordance  with 
Article 29d.’;  

(11) 

Article 34 is amended as follows: 

(a)  paragraph 1, second subparagraph, point (aa), is replaced by the following: 

‘(aa)  where  applicable,  express  an  opinion  based  on  a  limited  assurance 
engagement as regards the compliance of the sustainability reporting with 
the  requirements  of  this  Directive,  including  the  compliance  of  the 
sustainability  reporting  with  the  sustainability  reporting  standards 
adopted  pursuant  to  Article  29b,  the  process  carried  out  by  the 
undertaking  to  identify  the  information  reported  pursuant  to  those 
sustainability  reporting  standards,  and 
the 
requirement  to  mark  up  sustainability  reporting  in  accordance  with 
Article  29d,  and  as  regards 
the  reporting 
requirements provided for in Article 8 of Regulation (EU) 2020/852;’; 

the  compliance  with 

the  compliance  with 

(b) 

 the following paragraph 2a is inserted: 

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‘2a.  Member States shall ensure that the opinion referred to in paragraph 1, 
second subparagraph, point (aa), is prepared in full respect of the obligation on 
undertakings  not  to  seek  to  obtain  from  undertakings  in  their  value  chain 
which, on their balance sheet dates, do not exceed the average number of 1000 
employees  during  the  financial  year  any  information  that  exceeds  the 
information  specified  in  the  standards  for  voluntary  use  referred  to  in  Article 
29ca, except for additional sustainability information that is commonly shared 
between undertakings in the sector concerned.’;  

(12) 

in Article 40a, paragraph 1 is amended as follows: 

(a) 

the second subparagraph is replaced by the following: 

‘The  first  subparagraph  shall  only  apply  to  large  subsidiary  undertakings  as 
defined in Article 3(4) of this Directive’; 

(b) 

the fourth and fifth subparagraphs are replaced by the following: 

‘The  rule  referred  to  in  the  third  subparagraph  shall  only  apply  to  a  branch 
where the third-country undertaking does not have a subsidiary undertaking as 
referred  to  in  the  first  subparagraph,  and  where  the  branch  generated  a  net 
turnover  exceeding  the  threshold  referred  to  in  Article  3(4)  point  (b)  of  this 
Directive in the preceding financial year. 

The  first  and  third  subparagraphs  shall  only  apply  to  the  subsidiary 
undertakings  or  branches  referred  to  in  those  subparagraphs  where  the  third-
country  undertaking,  at  its  group  level,  or,  if  not  applicable,  the  individual 
level,  generated  a  net  turnover  in  the  Union  exceeding  EUR  450 000 000  for 
each of the last two consecutive financial years.’; 

(13) 

Article 49 is amended as follows: 

(a) 

the following paragraphs 3c to 3e are inserted: 

‘3c. 
The  power  to  adopt  delegated  acts  referred  to  in  Articles  19b(5),  
29aa(5)  and  29ca  shall  be  conferred  on  the  Commission  for  an  indeterminate 
period from [date of entry into force of amending Directive]. 

3d. 
The  delegations  of  powers  referred  to  in  Articles  19b(5),  29aa(5)  and 
29ca  may  be  revoked  at  any  time  by  the  European  Parliament  or  by  the 
Council. A decision to revoke shall put an end to the delegation of the power 
specified in that decision. It shall take effect the day following the publication 
of the decision in the Official Journal of the European Union or at a later date 
specified therein. It shall not affect the validity of any delegated acts already in 
force. 

3e. 
The  Commission  shall  gather  all  necessary  expertise,  prior  to  the 
adoption  and  during  the  development  of  delegated  acts  pursuant  to  Articles 
19b(5)  and  29aa(5),  including  through  the  consultation  of  the  experts  of  the 
Member State Expert Group on Sustainable Finance referred to in Article 24 of 
Regulation (EU) 2020/852.’; 

(b)  paragraph 5 is replaced by the following: 

‘5. 
A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 
19b,  Article  29aa,  Articles  29b,  29ca  or  40b,  or  Article 46(2)  shall  enter  into 
force  only  if  no  objection  has  been  expressed  either  by  the  European 
Parliament or the Council within a period of two months of notification of that 

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act to the European Parliament and the Council or if, before the expiry of that 
period,  the  European  Parliament  and  the  Council  have  both  informed  the 
Commission  that  they  will  not  object.  That  period  shall  be  extended  by  two 
months at the initiative of the European Parliament or the Council.’. 

Article 3 

Amendments to Directive (EU) 2022/2464  

In Directive (EU) 2022/2464, Article 5(2) is amended as follows: 

(1) 

the first subparagraph is amended as follows:  

(a)  point (a) is deleted; 

(b)  point (b) is amended as follows: 

(i) 

point (i) is replaced by the following: 

‘(i) 

to  large  undertakings  which,  on  their  balance  sheet  dates,  exceed 
the average number of 1000 employees during the financial year;’; 

(ii)  point (ii) is replaced by the following: 

‘(ii) 

to  parent  undertakings  of  a  large  group  which,  on  their  balance 
sheet  dates,  exceed  the  average  number  of  1000  employees,  on  a 
consolidated basis, during the financial year;’; 

(c)  point (c) is deleted; 

(2) 

the third subparagraph is amended as follows: 

(a)  point (a) is deleted;  

(b)  point (b) is amended as follows: 

(i) 

point (i) is replaced by the following: 

‘(i) 

to  issuers  as  defined  in  Article  2(1),  point  (d)  of  Directive 
2004/109/EC  which  are  large  undertakings  within  the  meaning  of 
Article 3(4) of Directive 2013/34/EU which, on their balance sheet 
dates,  exceed  the  average  number  of  1000  employees  during  the 
financial year;’; 

(ii)  point (ii) is replaced by the following: 

‘(ii) 

to  issuers  as  defined  in  Article  2(1),  point  (d)  of  Directive 
2004/109/EC  which  are  parent  undertakings  of  a  large  group 
which,  on  its  balance  sheet  dates,  exceed  the  average  number  of 
1000  employees  ,  on  a  consolidated  basis,  during  the  financial 
year;’; 

(c)  point (c) is deleted. 

Article 4 

Directive (EU) 2024/1760 is amended as follows: 

Amendments to Directive (EU) 2024/1760 

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(1) 

in Article 1(1), point (c) is replaced by the following: 

‘(c) 

the  obligation  for  companies  to  adopt  a  transition  plan  for  climate  change 
mitigation, including implementing actions which aim to ensure, through best 
efforts, compatibility of the business model and of the strategy of the company 
with  the  transition  to  a  sustainable  economy  and  with  the  limiting  of  global 
warming to 1,5 oC in line with the Paris Agreement.’; 

(2) 

in Article 3(1), point (n) is replaced by the following: 

‘(n)  ‘stakeholders’  means  the  company’s  employees,  the  employees  of  its 
subsidiaries  and  of  its  business  partners,  and  their  trade  unions  and  workers’ 
representatives, and individuals or communities whose rights or interests are or 
could  be  directly  affected  by  the  products,  services  and  operations  of  the 
company,  its  subsidiaries  and  its  business  partners  and  the  legitimate 
representatives of those individuals or communities;’; 

(3) 

Article 4 is replaced by the following: 

‘Article 4 

Level of harmonisation 

1.  Without prejudice to Article 1(2) and (3), Member States shall not introduce, 
in  their  national  law,  provisions  within  the  field  covered  by  this  Directive  laying 
down  human  rights  and  environmental  due  diligence  obligations  diverging  from 
those  laid  down  in  Articles  6  and  8,  Article  10(1)  to  (5),  Article  11(1)  to  (6)  and 
Article 14. 

2. 
Notwithstanding paragraph 1, this Directive shall not preclude Member States 
from  introducing,  in  their  national  law,  more  stringent  provisions  diverging  from 
those  laid  down  in  provisions  other  than  Articles  6  and,  8,  Article  10(1)  to  (5), 
Article 11(1) to  (6) and Article 14, or provisions that are more specific in  terms  of 
the objective or the field covered, including by regulating specific products, services 
or  situations,  in  order  to  achieve  a  different  level  of  protection  of  human, 
employment and social rights, the environment or the climate.’;  

(4) 

Article 8 is amended as follows: 

(a) 

in paragraph 2, point (b) is replaced by the following: 

‘(b)  based on the results of the mapping as referred to in point (a), carry out 
and  in-depth  assessment  of  their  own  operations,  those  of  their 
subsidiaries and, where related to their chains of activities, those of their 
direct  business  partners,  in  the  areas  where  adverse  impacts  were 
identified to be most likely to occur and most severe.’;  

(b) 

the following paragraph 2a is inserted: 

‘2a.  Where a company has plausible information that suggests that adverse 
impacts at the level of the operations of an indirect business partner have arisen 
or  may  arise,  it  shall  carry  out  an  in-depth  assessment.  The  company  shall 
always  carry  out  such  an  assessment  where  the  indirect,  rather  than  direct, 
nature of the relationship with the business partner is the result of an artificial 
to  a 
arrangement 
circumvention  of  paragraph  2,  point  (b).  Where  the  assessment  confirms  the 

that  does  not  reflect  economic  reality  but  points 

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38 

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likelihood  or  existence  of  the  adverse  impact,  it  is  deemed  to  have  been 
identified.  

The  first  subparagraph  is  without  prejudice  to  the  company  considering 
available  information  about  indirect  business  partners  and  whether  those 
business partners can follow the rules and principles set out in the company’s 
code of conduct when selecting a direct business partner.  

Notwithstanding  the  first  subparagraph,  irrespective  of  whether  plausible 
information is available about indirect business partners, a company shall seek 
contractual assurances from a direct business partner that that business partner 
will  ensure  compliance  with  the  company’s  code  of  conduct  by  establishing 
corresponding contractual assurances from its business partners. Article 10(2), 
points (b) and (e) shall apply accordingly.’; 

(c)  paragraph 4 is replaced by the following:  

‘4.  Where information necessary for the in-depth assessment provided for 
in  paragraph 2, point (b), and  in  paragraph  2a  can be obtained  from  different 
business  partners,  the  company  shall  prioritise  requesting  such  information, 
where  reasonable,  directly  from  the  business  partner  or  partners  where  the 
adverse impacts are most likely to occur.’; 

(d) 

the following paragraph 5 is added:  

‘5.   Member  States  shall  ensure  that,  for  the  mapping  provided  for  in 
paragraph 2, point (a), companies do not seek to obtain information from direct 
business partners with fewer than 500 employees that exceeds the information 
specified  in  the  standards  for  voluntary  use  referred  to  in  Article  29a  of 
Directive 2013/34/EU. 

By way of derogation to the first sub-paragraph, where additional information 
is necessary for the mapping provided for in paragraph 2, point (a), in light of 
indications  of  likely  adverse  impacts  or  because  the  standards  do  not  cover 
relevant impacts, and where such additional information cannot reasonably be 
obtained  by  other  means,  the  company  may  seek  such  information  from  that 
business partner.’; 

(5) 

in Article 10, paragraph 6 is replaced by the following: 

‘6.   As  regards  potential  adverse  impacts  as  referred  to  in  paragraph  1  that  could 
not be prevented or adequately mitigated by the measures set out in paragraphs 2, 4 
and 5, the company shall, as a last resort: 

(a) 

refrain from entering into new, or extending existing, relations with a business 
partner  in  connection  with  which,  or  in  the  chain  of  activities  of  which,  the 
impact has arisen,  

(b)  where  the  law  governing  its  relation  with  the  business  partner  concerned  so 
entitles  it,  adopt  and  implement  an  enhanced  prevention  action  plan  for  the 
specific  adverse  impact  without  undue  delay,  provided  that  there  is  a 
reasonable expectation that those efforts will succeed, and  

(c) 

use or increase its leverage through the suspension of the business relationship 
with respect to the activities concerned.  

EN 

39 

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As long as there is a reasonable expectation that the enhanced prevention action plan 
will  succeed,  the  mere  fact  of  continuing  to  engage  with  the  business  partner  shall 
not trigger the company’s liability. 

Prior  to  suspending  a  business  relationship,  the  company  shall  assess  whether  the 
adverse  impacts  from  doing  so  can  be  reasonably  expected  to  be  manifestly  more 
severe than the adverse impact that could not be prevented or adequately mitigated. 
Should  that be the case, the company shall not  be required to  suspend the business 
relationship  and  shall  be  in  a  position  to  report  to  the  competent  supervisory 
authority about the duly justified reasons for such decision. 

Member  States  shall  provide  for  an  option  to  suspend  the  business  relationship  in 
contracts  governed  by  their  laws  in  accordance  with  the  first  subparagraph,  except 
for contracts where the parties are obliged by law to enter into them. 

Where the company decides to suspend the business relationship, it shall take steps 
to  prevent,  mitigate or bring to  an end the impacts  of the suspension, shall provide 
reasonable  notice  to  the  business  partner  concerned  and  shall  keep  that  decision 
under review. 

Where the company decides not to suspend the business relationship pursuant to this 
Article,  it  shall  monitor  the  potential  adverse  impact  and  periodically  assess  its 
decision and whether further appropriate measures are available.’; 

(6) 

in Article 11, paragraph 7 is replaced by the following: 

‘7.  As regards  actual adverse impacts as referred to in paragraph 1 that could not 
be prevented or adequately mitigated by the measures set out in paragraphs 3, 5 and 
6, the company shall, as a last resort:  

(a) 

refrain from entering into new, or extending existing, relations with a business 
partner  in  connection  with  which,  or  in  the  chain  of  activities  of  which,  the 
impact has arisen,  

(b)  where  the  law  governing  its  relation  with  the  business  partner  concerned  so 
entitles  it,  adopt  and  implement  an  enhanced  prevention  action  plan  for  the 
specific  adverse  impact  without  undue  delay,  provided  that  there  is  a 
reasonable expectation that those efforts will succeed, and  

(c) 

use or increase its leverage through the suspension of the business relationship 
with respect to the activities concerned.  

As long as there is a reasonable expectation that the enhanced prevention action plan 
will  succeed,  the  mere  fact  of  continuing  to  engage  with  the  business  partner  shall 
not trigger the company’s liability. 

Prior  to  suspending  a  business  relationship,  the  company  shall  assess  whether  the 
adverse  impacts  from  doing  so  can  be  reasonably  expected  to  be  manifestly  more 
severe than the adverse impact that could not be prevented or adequately mitigated. 
Should  that be the case, the company shall not  be required to  suspend the business 
relationship  and  shall  be  in  a  position  to  report  to  the  competent  supervisory 
authority about the duly justified reasons for such decision. 

Member  States  shall  provide  for  an  option  to  suspend  the  business  relationship  in 
contracts  governed  by  their  laws  in  accordance  with  the  first  subparagraph,  except 
for contracts where the parties are obliged by law to enter into them. 

EN 

40 

  EN 

 
Where the company decides to suspend the business relationship, it shall take steps 
to  prevent,  mitigate or bring to  an end the impacts  of the suspension, shall provide 
reasonable  notice  to  the  business  partner  concerned  and  shall  keep  that  decision 
under review. 

Where the company decides not to suspend the business relationship pursuant to this 
Article,  it  shall  monitor  the  potential  adverse  impact  and  periodically  assess  its 
decision and whether further appropriate measures are available.’; 

(7) 

in Article 13, paragraph 3 is amended as follows: 

(a) 

the introductory wording is replaced by the following:  

‘Consultation  of relevant  stakeholders  shall take place at  the following stages 
of the due diligence process:’; 

(b)  points (c) and (e) are deleted; 

(8) 

in Article 15, the second sentence is replaced by the following: 

‘Such assessments shall be based, where appropriate, on qualitative and quantitative 
indicators and be carried out without undue delay after a significant change occurs, 
but at least every 5 years and whenever there are reasonable grounds to believe that 
the measures are no longer adequate or effective or that new risks of the occurrence 
of those adverse impacts may arise.’; 

(9) 

in Article 19, paragraph 3 is replaced by the following: 

‘3.  The guidelines referred to in paragraph 2, point (a), shall be made available by 
26  July  2026,  those  referred  to  in  paragraph  2,  points  (d)  and  (e),  by  26  January 
2027, and those referred to in paragraph 2, points (b), (f) and (g), by 26 July 2027.’; 

(10) 

in Article 22(1), the first subparagraph is replaced by the following: 

‘Member States shall ensure that companies referred to in Article 2(1), points (a), (b) 
and (c), and  Article 2(2), points (a), (b) and  (c),  adopt  a transition  plan for climate 
change  mitigation,  including  implementing  actions,  which  aim  to  ensure,  through 
best efforts, that the business model and strategy of the company are compatible with 
the  transition  to  a  sustainable  economy  and  with  the  limiting  of  global warming  to 
1.5°C  in  line  with  the  Paris  Agreement  and  the  objective  of  achieving  climate 
neutrality  as  established  in  Regulation  (EU)  2021/1119,  including  its  intermediate 
and 2050 climate neutrality targets, and where relevant, the exposure of the company 
to coal-, oil- and gas-related activities.’; 

(11) 

in Article 27, paragraph 4 is replaced by the following: 

‘4.  The Commission, in collaboration with Member States, shall issue guidance to 
assist supervisory authorities in determining the level of penalties in accordance with 
this Article. Member States shall not set a maximum limit of pecuniary penalties  in 
their  national  law  transposing  this  Directive  that  would  prevent  supervisory 
authorities from imposing penalties in accordance with the principles and factors set 
out in paragraphs 1 and 2.’; 

(12) 

 Article 29 is amended as follows: 

(a)  paragraph 1 is deleted; 

(b)  paragraph 2 is replaced by the following:  

EN 

41 

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‘2.  Where  a  company  is  held  liable  pursuant  to  national  law  for  damage 
caused to a natural or legal person by a failure to comply with the due diligence 
requirements  under  this  Directive,  Member  States  shall  ensure  that  those 
persons have a right to full compensation. Full compensation shall not lead to 
overcompensation,  whether  by  means  of  punitive,  multiple  or  other  types  of 
damages.’;  

(c) 

in paragraph 3, point (d) is deleted; 

(d)  paragraph 4 is replaced by the following:  

‘4. 
Companies  that  have  participated  in  industry  or  multi-stakeholder 
initiatives, or used independent third-party verification or contractual clauses to 
support  the  implementation  of  due  diligence  obligations  may  nevertheless  be 
held liable in accordance with national law.’; 

(e) 

in paragraph 5, the first subparagraph is replaced by the following: 

‘The civil liability of a company for damages as referred to in this Article shall 
be without prejudice to the civil liability of its subsidiaries or of any direct and 
indirect business partners in the chain of activities of the company.’; 

(f) 

paragraph 7 is deleted;  

(13) 

in Article 36, paragraph 1 is deleted.  

Article 5 

Transposition 

1. 
Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions necessary to comply with this Directive by [12 months after entry into force] at the 
latest. They shall forthwith communicate to the Commission the text of those provisions. 

When Member States adopt those provisions, they shall contain a reference to this Directive 
or be accompanied by such a reference on the occasion of their official publication. Member 
States shall determine how such reference is to be made. 

Member States shall communicate to the Commission the text of the main provisions 

2. 
of national law which they adopt in the field covered by this Directive. 

Article 6 

Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

EN 

42 

  EN 

 
 
Article 7 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

EN 

43 

  EN 

 
 
LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT 

1. 

• 

• 

• 

2. 

• 

• 

• 

• 

3. 

• 

• 

• 

• 

• 

• 

4. 

5. 

• 

• 

• 

CONTEXT OF THE PROPOSAL ............................................................................... 1 

Reasons for and objectives of the proposal .................................................................. 1 

Consistency with existing policy provisions in the policy area ................................... 7 

Consistency with other Union policies ........................................................................ 8 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY ............................... 9 

Legal basis .................................................................................................................... 9 

Subsidiarity (for non-exclusive competence)............................................................... 9 

Proportionality ............................................................................................................. 9 

Choice of the instrument ............................................................................................ 10 

RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS 
AND IMPACT ASSESSMENTS .............................................................................. 10 

Ex-post evaluations/fitness checks of existing legislation ......................................... 10 

Stakeholder consultations .......................................................................................... 10 

Collection and use of expertise .................................................................................. 12 

Impact assessment ...................................................................................................... 12 

Regulatory fitness and simplification ........................................................................ 13 

Fundamental rights ..................................................................................................... 13 

BUDGETARY IMPLICATIONS .............................................................................. 14 

OTHER ELEMENTS ................................................................................................ 14 

Implementation plans and monitoring, evaluation and reporting arrangements ........ 14 

Explanatory documents (for directives) ..................................................................... 14 

Detailed explanation of the specific provisions of the proposal ................................ 14 

1. 

1.1. 

1.2. 

1.3. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3 

Title of the proposal/initiative ...................................................................................... 3 

Policy area(s) concerned .............................................................................................. 3 

Objective(s) .................................................................................................................. 3 

1.3.1.  General objective(s) ..................................................................................................... 3 

1.3.2.  Specific objective(s) ..................................................................................................... 3 

1.3.3.  Expected result(s) and impact ...................................................................................... 4 

1.3.4. 

Indicators of performance ............................................................................................ 4 

1.4. 

1.5. 

The proposal/initiative relates to: ................................................................................. 5 

Grounds for the proposal/initiative .............................................................................. 5 

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative ............................................................ 5 

EN 

1 

  EN 

 
 
1.5.2.  Added value of EU involvement (it may result from different factors, e.g. 

coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this section 'added value of EU involvement' is the value resulting 
from EU action, that is additional to the value that would have been otherwise 
created by Member States alone. ................................................................................. 6 

1.5.3.  Lessons learned from similar experiences in the past .................................................. 6 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 
other appropriate instruments ....................................................................................... 6 

1.5.5.  Assessment of the different available financing options, including scope for 

redeployment ................................................................................................................ 6 

3. 

3.1. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE .............. 7 

Heading(s) of the multiannual financial framework and expenditure budget line(s) 
affected ......................................................................................................................... 7 

DIGITAL DIMENSIONS ............................................................................................ 7 

Requirements of digital relevance ................................................................................ 7 

Data .............................................................................................................................. 8 

Digital solutions ........................................................................................................... 8 

Interoperability assessment .......................................................................................... 8 

Measures to support digital implementation ................................................................ 8 

EN 

2 

  EN 

 
 
 
1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  amending 
Directives  2006/43/EC,  2013/34/EU,  (EU)  2022/2464  and  (EU)  2024/1760  as 
regards certain corporate sustainability reporting and due diligence requirements for 
undertakings.  

1.2. 

Policy area(s) concerned  

Capital  Markets  Union,  Savings  and  Investment  Union,  European  Green  Deal, 
Sustainable Finance Strategy, Company law and corporate governance. 

1.3. 

Objective(s) 

1.3.1.  General objective(s) 

The general objectives pursued by this legislative proposal are to simplify and reduce 
certain elements of Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 
2024/1760 in order to alleviate the reporting and due diligence burden on companies 
in scope of the requirements. 

By  reducing  the  administrative  burden  associated  with  reporting  requirements  and 
the  compliance  costs  of  sustainability  due  diligence  stemming  from  the  above 
legislation, this proposal intends to enhance the proportionality of the framework and 
the competitiveness of European companies, while also maintaining the objectives of 
the European Green Deal.  

1.3.2. 

Specific objective(s) 

The  specific  objectives  of  the  proposed  amendments  to  Directive  2013/34/EU 
included in this proposal aim to achieve the following results:  

– 

– 

– 

– 

Reduce  the  number  of  companies  which  fall  within  the  scope  of  the 
sustainability reporting requirements to large companies with more than 1000 
employees.  

Reduce  trickle-down  effects  on  SMEs  and  smaller  large  companies  by 
imposing the voluntary sustainability reporting standard for SMEs (VSME) as 
the  value  chain  cap  for  all  companies  not  subject  to  sustainability  reporting 
requirements.  

Provide for a proportionate standard for voluntary use by companies which are 
not subject to sustainability reporting requirements.  

Remove  the  empowerment  for  the  Commission  to  adopt  sector-specific 
sustainability reporting standards.  

The  specific  objectives  of  the  proposed  amendments  to  Directive  2006/43/EC 
included in this proposal aim to achieve the following results:  

– 

Delete the obligation for the Commission to adopt standards for sustainability 
assurance  by  October  2026.  The  Commission  will  issue  targeted  assurance 
guidelines by 2026. 

The  specific  objectives  of  the  proposed  amendments  to  Directive  (EU)  2022/2464 
included in this proposal aim to achieve the following results:  

EN 

3 

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– 

Reflect  the  reduction  of  the  undertakings  in  scope  of  sustainability  reporting 
under  Articles  19a  and  29a  of  the  Accounting  Directive  in  the  relevant 
provision specifying the application dates for sustainability reporting rules.  

The  specific  objectives  of  the  proposed  amendments  to  Directive  (EU)  2024/1760 
included in this proposal aim to achieve the following results:  

– 

– 

Simplify  selected  due  diligence  requirements  in  order  to  avoid  unnecessary 
complexities and costs for the large companies under the scope. 

Reduce further the trickle-down effects on SMEs and small midcap companies 
(SMCs)  in  the  value  chains  of  large  companies  in  scope  by  limiting 
information requests. 

1.3.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The  expected  results  and  impact  of  the  proposed  amendments  are  to  simplify 
sustainability reporting requirements and as a result reduce the administrative burden 
on companies in this regard, whilst maintaining the objectives of the European Green 
Deal  and  the  Sustainable  Finance  Action  Plan.  The  proposed  amendments  are  also 
expected to  result in significant cost savings for companies in scope when carrying 
out  sustainability  reporting.  In  the  same  vein,  the  amendments  to  the  human  rights 
and  environmental  due  diligence  requirements  are  expected  to  simplify  related 
corporate processes and procedures as compared to the Directive as in force (which 
is not yet transposed or applied). 

1.3.4. 

Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

The CSRD has been applied by a first set of companies who are publishing their first 
sustainability  statements  mainly  in  the  first  half  of  2025.  It  has  therefore  not  been 
possible  to  undertake  an  ex-post  evaluation  or  fitness  check  of  either  piece  of 
legislation.   

To  monitor  progress  towards  achieving  the  proposal’s  specific  objectives,  the 
Commission  will  explore  the  possibility  of  organising  exchanges  with  stakeholders 
in different formats as well as periodic surveys of users of sustainability information 
and  of  undertakings  that  report  such  information,  depending  on  the  availability  of 
financial  resources.  Article  6  of  the  CSRD  requires  the  Commission  to  present  a 
report on the implementation of the Directive by April 2029.  

In  this  proposal,  the  Commission  also  commits  to  revising  the  first  set  of  ESRS. 
Under  Directive  2013/34/EU,  the  Commission  is  required  to  review  those 
sustainability reporting standards, including the sustainability reporting standards for 
small and medium-sized undertakings, every three years to take account of relevant 
developments, including the development of international standards. 

The implementation of the CSDDD as amended, and its effectiveness in reaching its 
objectives, in particular in addressing adverse impacts, will also be subject to regular 
evaluation according to Article 36 of that Directive.  

A number of indicators will be used to monitor the progress of these proposals, such 
as  the  effectiveness  and  timeliness  of  the  actions  proposed,  the  efficiency  of 
processes  for  collecting  and  processing  data  in  accordance  with  the  sustainability 

EN 

4 

  EN 

 
reporting  requirements,  and  the  objective  to  limit  administrative  burden  and  avoid 
unnecessary or duplicative reporting requirements. 

Under  Article  36  of  the  CSDDD,  the  Commission  will  submit,  by  26  July  2030,  a 
report to the European Parliament and to the Council on the implementation of this 
Directive and its  effectiveness in  reaching its objectives, in particular in  addressing 
adverse impacts. It will cover, among others, the impacts of this Directive on SMEs, 
the scope of this  Directive in  terms  of the companies covered, the definition of the 
term  ‘chain  of  activities’;  the  Annex,  including  whether  it  should  be  extended  to 
cover  additional  adverse  impacts;  the  rules  on  combatting  climate  change;  the 
effectiveness  of  the  enforcement  mechanisms,  penalties  and  the  rules  on  civil 
liability; the level of harmonisation, including convergence and divergence between 
provisions of national law transposing this Directive. 

1.4. 

The proposal/initiative relates to:  

 a new action  
 a new action following a pilot project / preparatory action33  

 the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative 

With  this  proposal,  the  Commission  proposes  a  Directive  amending  a  number  of 
provisions  of  Directives  2006/43/EC,  2013/34/EU,  (EU)  2022/2464,  and  (EU) 
2024/1760. Once the co-legislators have reached an agreement on the contents of the 
proposal,  the  Member  States  will  have  a  certain  period  of  time  to  transpose  the 
amendments introduced by this Directive into their national law.  

In  a  separate  legislative  proposal,  the  Commission  proposes  to  postpone  the 
application of the sustainability reporting requirements in Directive 2013/34/EU for a 
period  of  two  years  for  all  large  companies  and  listed  SMEs  –  including  non-EU 
issuers  that  meet  these  size  thresholds  -  currently  in  scope  and  required  to  comply 
with  sustainability  reporting  rules  from  financial  year  2025  onwards.  In  the  same 
proposal,  the  Commission  also  proposes  to  delay,  by  one  year,  the  transposition 
deadline  (to  26  July  2027)  and  the  first  wave  of  application  (26  July  2028)  of  the 
sustainability due diligence rules set out in Directive 2024/1760. 

The  Commission  also  proposes  to  revise  Commission  Delegated  Regulation  (EU) 
2023/2772  (European  Sustainability  Reporting  Standards).  The  Commission  will 
adopt  the  revised  ESRS  delegated  act  in  time  for  those  undertakings  in  the  second 
wave that would be required to start reporting under the CSRD in 2028 for financial 
year 2027 to apply the revised standards.  

To  monitor  progress  towards  achieving  the  proposal’s  specific  objectives,  the 
Commission  will  explore  the  possibility  of  organising  exchanges  with  stakeholders 
in different formats as well as periodic surveys of users of sustainability information 
and  of  undertakings  that  report  such  information,  depending  on  the  availability  of 

33 

As referred to in Article 58(2), point (a) or (b) of the Financial Regulation. 

EN 

5 

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financial  resources.  Article  6  of  the  CSRD  requires  the  Commission  to  present  a 
report on the implementation if the Directive by April 2029. The implementation of 
the CSDDD as amended, and its effectiveness in reaching its objectives, in particular 
in addressing adverse impacts, will also be subject to regular evaluation according to 
Article 36 of that Directive. This proposal does not require an implementation plan. 

1.5.2.  Added  value  of  EU  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the  purposes  of  this  section  'added  value  of  EU  involvement'  is  the  value  resulting 
from  EU  action,  that  is  additional  to  the  value  that  would  have  been  otherwise 
created by Member States alone. 

The  Accounting  Directive,  as  amended  by  the  CSRD,  already  regulates  the 
disclosure  of  sustainability  information  in  the  EU.  Common  rules  on  sustainability 
reporting and its assurance ensure a level playing field for companies established in 
the  different  Member  States.  Significant  differences 
for 
sustainability  reporting  and  assurance  between  Member  States  would  create 
additional  costs  and  complexity  for  companies  operating  across  borders,  which 
would be detrimental to the single market. Member States acting alone are not able to 
modify existing EU laws to reduce the burden on companies.   

requirements 

in 

Similarly,  the  CSDDD  already  sets  out  a  harmonised  regulatory  framework  for 
corporate  sustainability  due  diligence,  and  also  covers  certain  third-country 
companies active in the EU market, ensuring level playing field in this policy area.  

1.5.3.  Lessons learned from similar experiences in the past 

N/A 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 

other appropriate instruments 

N/A 

1.5.5.  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

N/A 

EN 

6 

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ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

3. 

3.1. 

N/A 

4. 

DIGITAL DIMENSIONS 

4.1. 

Requirements of digital relevance 

The  reporting  requirements  introduced  by  Directive  2013/34/EU  require  companies  to 
collect and report data concerning their impacts, risks and opportunities as regards material 
sustainability  matters.  This  exercise  entails  significant  data  identification,  collection, 
processing, verification and publication.  In order to collect the relevant data, undertakings 
often use digital data collection and data sharing platforms. Additionally, in order to store 
and process the data for the purposes of sustainability reporting companies also often utilise 
digital data management tools.  

Users  of  sustainability  information  increasingly  expect  such  information  to  be  accessible, 
comparable  and  machine-readable  in  digital  formats.  Member  States  must  require  that 
undertakings  subject  to  the  sustainability  reporting  requirements  of  Directive  2013/34/EU 
make  their  management  reports  available  on  their  websites,  free  of  charge  to  the  public. 
Digitalisation  creates  opportunities  to  exploit  information  more  efficiently  and  holds  the 
potential  for  significant  cost  savings  for  both  users  and  undertakings.  Digitalisation  also 
enables  the  centralisation  at  Union  and  Member  State  level  of  data  in  an  open  and 
accessible  format  that  facilitates  reading  and  allows  for  the  comparison  of  data.  These 
requirements  also  complement  the  creation  of  a  European  single  access  point  (ESAP)  for 
public corporate information.  

As regards specific requirements within the Directive which are of digital relevance, please 
see below.  

Directive  2013/34/EU  requires  undertakings  subject  to  sustainability  reporting  to  prepare 
their  management  report  in  the  electronic  reporting  format  specified  in  Article  3  of 
Commission  Delegated  Regulation  (EU)  2019/815  (ESEF  Delegated  Regulation).  It  also 
requires  these  undertakings  to  mark  up  their  sustainability  reporting,  including  the 
disclosures  required  by  Article  8  of  Regulation  (EU)  2020/852,  in  accordance  with  the 
digital taxonomy to be adopted by the Commission by way of an amendment to  the ESEF 
Delegated Regulation. 

A digital taxonomy for the Union sustainability reporting standards will allow sustainability 
reporting  to  be  tagged  and  to  be  machine-readable.  Until  the  adoption  of  this  digital 
taxonomy,  undertakings  are  not  required  to  mark-up  their  sustainability  statements. 
Considering that the sustainability statement will become machine-readable only once it is 
both  included  in  an  XHTML  document  and  marked-up  with  a  digital  taxonomy,  pending 
the  adoption  of  the  digital  taxonomy  undertakings  are  also  not  required  to  prepare  the 
management report in XHTML. 

Stakeholders  affected  by  these  requirements  include  undertakings  required  to  prepare  and 
publish  a  sustainability  statement  which  has  been  digitally  tagged  and  provided  in  an 
XHTML  format,  as  well  as  assurance  providers  who  must  verify  that  the  sustainability 
statement meets the necessary requirements. 

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The current proposal does not modify the existing digital tagging or format rules introduced 
by  the  CSRD,  which  will  enhance  digital  reporting  and  enable  the  use  of  artificial 
intelligence in utilising the information that undertakings report.  

As  regards  the  CSDDD,  digital  tools  and  technologies,  such  as  those  used  for  tracking, 
surveillance  or  tracing  raw  materials,  goods  and  products  throughout  value  chains,  for 
instance satellites, drones, radars, or platform-based solutions, could support and reduce the 
cost  of  data  gathering  for  value  chain  management,  including  the  identification  and 
assessment  of  adverse  impacts,  prevention  and  mitigation,  and  monitoring  of  the 
effectiveness of due diligence measures.  

4.2. 

Data 

See section above.  

4.3. 

Digital solutions 

See section above.  

4.4. 

Interoperability assessment 

N/A 

4.5.  Measures to support digital implementation 

To facilitate the smooth implementation of the requirements of digital relevance identified 
in Section 4.1., the Commission is involved in a number of initiatives.  

Firstly,  a  digital  taxonomy  for  the  Union  sustainability  reporting  standards  will  be 
necessary  to  allow  the  reported  information  to  be  tagged  in  accordance  with  those 
sustainability  reporting  standards.  The  Commission  will  adopt  a  digital  taxonomy  for  the 
tagging  of  sustainability  information  via  a  Delegated  Act,  after  having  received  technical 
advice from ESMA.  

Secondly,  in  the  framework  of  the  2025  Technical  Support  Instrument  round,  the 
Commission  intends  to  launch  a  flagship  multi-country  project  entitled  "Improving 
Sustainability  Reporting  for  Businesses."  This  initiative  aims  to  enhance  the  capacity  of 
Member States to support companies, particularly SMEs, in implementing CSRD and EU 
Taxonomy reporting requirements. The support under this initiative will take into account 
the evolution of the reporting requirements, and it will also be relevant for non-listed SMEs 
that  are  not  subject  to  mandatory  reporting  but  face  growing  demands  for  sustainability 
information from their financial and value chain partners. 

Thirdly,  EFRAG  has  launched  an  SME  forum  in  which  they  bring  together  relevant 
stakeholders  of  the  SME  community  to  discuss  the  implementation  of  the  sustainability 
reporting  requirements  and  how  digital  solutions  and  tools  can  be  used  to  facilitate 
sustainability reporting for SMEs.  

As  regards  the  CSDDD,  in  order  to  help  companies  fulfil  their  due  diligence  obligations 
along their value chain,  the Directive encourages the use of  digital tools and technologies 
and requires the Commission to issue guidelines with useful information and references to 
appropriate  resources.  When  using  digital  tools  and  technologies,  companies  should  take 
into account and appropriately address possible risks associated therewith, and put in place 
mechanisms to verify the appropriateness of the information obtained. 

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