Business scope and magnitude of regulatory change

The new thresholds leave out of the reporting and due diligence the vast majority of companies initially foreseen under CSRDD and CSDDD. Instead of companies with a turnover of 50 million or more, as proposed by the Commission, the new minimum is 450 million and more than 1,000 employees. According to the Presidency of the Council, this modification exempts more than 85% of the companies initially included. This represents a regulatory shift aimed at reducing administrative costs and slowing down the expansion of the mandatory ESG framework.

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Deep Changes in Reporting (CSRD)

The reporting obligation will no longer be generalized but restricted to large corporations. Three key changes:

• The report should be more quantitative, which reduces the narrative interpretation and narrows the information required.

• Sectoral standards are no longer mandatory but voluntary.

• Companies below the threshold can refuse to share additional information, preventing large groups from transferring documentary burdens to them.

In addition, the Commission will create a digital portal with templates and guides, which will facilitate the standardization of documentation and will foreseeably reduce divergences between national interpretations.

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Substantial reduction in due diligence (CSDDD)

Only companies with more than 5,000 employees and a turnover of more than 1.5 billion will be obliged to comply. The elimination of mandatory climate transition plans means that compatibility with the Paris Agreement will not be enforced through a corporate roadmap. Liability and penalties are shifted to the national level, with potential fines of up to 3% of global turnover.

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Political context of the agreement

The pact comes after months of business pressure and protracted negotiations. Some parliamentarians celebrate the result as a historic cost reduction for companies and a victory for competitiveness, while others interpret it as a weakening of the European Green Pact, especially the elimination of climate transition plans.

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Possible operational effects for European companies

• The ESG framework focuses on large players; large companies will continue to report, but with less sectoral complexity.

• SMEs are left in a more flexible position, with less documentation burden and less traceability requirements.

• The supply chain may experience less pressure on the small supplier, since it will be able to legally reject additional requests.

• In the absence of a climate transition obligation, there may be less structural alignment with climate objectives in carbon-intensive sectors.