European Parliament Endorses Simplification Measures for CSRD and CSDDD: Potential Implications for Companies and Global Value Chains

On 13 November 2025, the European Parliament adopted its negotiating position on a package of amendments designed to simplify both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The proposals mark a shift toward a more targeted application of EU sustainability requirements, with higher thresholds and streamlined due-diligence expectations.

Changes to the Corporate Sustainability Reporting Directive (CSRD)
Parliament proposes that sustainability reporting obligations apply only to companies with both more than 1,750 employees and net turnover above €450 million. This significantly reduces the population of companies directly in scope compared to the existing CSRD thresholds. The proposal also includes the creation of a centralized online portal managed by the European Commission, intended to consolidate all EU corporate-reporting obligations and provide templates, guidelines, and explanatory materials. This may lead to the following potential implications:
    •    A smaller reporting population may streamline supervisory demands and reduce administrative complexity for mid-sized companies.
    •    The centralized portal could improve comparability and accessibility of reporting resources across the EU.
    •    Reduced scope may influence how supply-chain expectations cascade to non-EU suppliers, depending on how large EU groups adjust their reporting processes.

Changes to the Corporate Sustainability Due Diligence Directive (CSDDD)
Under Parliament’s position, due-diligence obligations would apply only to companies with at least 5,000 employees and a global turnover of €1.5 billion or more.  The proposal removes the earlier requirement for companies to prepare a mandatory climate transition plan. It also places stronger emphasis on risk-based, rather than comprehensive, supply-chain mapping. Companies would rely mainly on information that is already “reasonably available,” and additional data requests to smaller suppliers should be made only when necessary. This may have the following potential implications:

• A narrower scope concentrates due-diligence requirements on very large companies, potentially reducing cost and compliance complexity for smaller entities.
• Reliance on existing information sources may reduce documentation demands across value chains but may also require companies to refine risk-identification methods.
• The absence of an explicit transition-plan obligation could affect the degree of alignment between due diligence and broader climate-strategy frameworks.

Legislative Process and Next Steps
The Parliament’s position forms one pillar of the upcoming trilogue negotiations with the Council and the European Commission, beginning 18 November 2025. Final provisions will depend on trilogue outcomes, particularly regarding scope, liability, and due-diligence expectations. Once a final agreement is reached, Member States will implement the directives through national transposition, which may introduce variations in enforcement and supervisory approaches.

Potential Relevance for Companies in Emerging Markets
Although the proposed thresholds substantially narrow the number of companies directly subject to EU sustainability rules, indirect effects may still arise through global supply chains. Large EU groups may continue to request sustainability information from non-EU suppliers, though the volume and type of information could shift depending on the final form of the risk-based due-diligence requirements. More…