EU reaches provisional compromise on CSRD and CSDDD reforms

Provisional agreement reached in trilogue at EU level

On December 9, 2025, the EU reached an important milestone in the reform process of its ESG regulation: Negotiators from the EU Council and the rapporteur from the Legal Affairs Committee (JURI) of the EU Parliament have agreed on a provisional agreement to revise the CSRD and CSDDD as part of the trilogue negotiations. The compromise reached defines key adjustments to the existing regulations, but has not yet been formally adopted.

At a press conference held by the EU Parliament and in press releases issued by the Parliament and the Council of the EU, the agreement was highlighted as having a positive effect on strengthening competitiveness and promoting investment in Europe. The administrative burden associated with the CSRD and CSDDD is expected to be reduced by up to 95% as a result.

Planned changes

In future, only companies meeting the following thresholds will be required to report under the CSRD or be subject to the CSDDD requirements:

CSRD (Corporate Sustainability Reporting Directive):

• Average number of employees: ≥ 1,000 full-time equivalents (FTEs)

• Net turnover: ≥ EUR 450 million

Capital market-oriented SMEs are to be exempted from the reporting requirement. Only if a company exceeds both thresholds, regardless of its capital market orientation, will it be required to report on sustainability in the future.

With regard to the audit, limited assurance is to remain in place permanently.

CSDDD (Corporate Sustainability Due Diligence Directive):

• Average number of employees: ≥ 5,000 full-time equivalents (FTEs)

• Net revenue: ≥ EUR 1.5 billion

In addition, further adjustments to the regulations are planned. For example, the requirement to draw up transition plans in connection with the Paris Climate Agreement will be removed. With regard to the CSDDD, the deadline by which Member States must implement it is to be postponed to July 26, 2028; the regulations are then to apply from July 2029.

Outlook

Despite the political agreement, this is not (yet) the final version of the law. The JURI Committee must first confirm the text before it is submitted to the plenary session of the European Parliament for a vote. This is scheduled for the JURI meeting on December 11, 2025; in calendar week 51, the EU Parliament will then vote on this compromise. At the same time, formal approval by the EU Council is required. This is expected to take place in 2025.

Only after this double vote will the reform be legally finalized. The amendments to the CSRD and CSDDD will then be published in the Official Journal of the EU and must subsequently be transposed into national law by all EU member states.

For German legislators, the adoption of the relevant regulations and requirements at EU level represents an important step in the national legislative process. As the CSRD has not yet been implemented in Germany, its implementation (expected in 2026) will then take place in accordance with the interim amendments to the CSRD. In addition to the implementation of the postponement of the initial application date for non-capital market-oriented companies (so-called Wave 2) by two years (i.e., for the first time for the year 2027), the adjustment of the thresholds is particularly relevant. This will result in a significant reduction in the user group of companies and corporations affected by sustainability reporting in Germany. According to initial estimates, less than 5% of the originally estimated 15,000 companies that would have been subject to the CSRD regulations will now be affected by sustainability reporting in Germany.