COM_2025_80_EN

Proposal Overview

• Document: Proposal for a Directive of the European Parliament and of the Council amending Directives (EU) 2022/2464 and (EU) 2024/1760.

• Date: Brussels, 26.2.2025

• Purpose: Modify deadlines for corporate sustainability reporting and due diligence requirements.

Explanatory Memorandum

1. Context of the Proposal

• Objectives:

  • Address the competitiveness and resilience of European companies.

  • Reduce burden and compliance costs associated with the CSRD and CSDDD.

• Key Reports and Declarations:

  • Mario Draghi on creating a regulatory landscape for competitiveness.

  • Budapest Declaration emphasizes simplification to reduce burdens for SMEs.

  • Aim to reduce reporting requirements by at least 25% by mid-2025.

• Relevant Directives:

  • CSRD aims to modernize corporate sustainability reporting.

  • CSDDD focuses on human rights and environmental impacts.

2. Specific Context and Objectives

• CSRD:

  • Applies to large undertakings and some SMEs with listed securities.

  • Phased reporting requirements:

    • Large public interest entities (2025 for FY 2024).

    • Other large undertakings (2026 for FY 2025).

    • Listed SMEs (2027 for FY 2026 with an opt-out option).

• CSDDD:

  • Adopted on 13 June 2024, focuses on due diligence regarding human rights impacts.

  • Implementation context includes geopolitical tensions and rising energy prices affecting EU competitiveness.

  • Proposal aims to postpone application of CSDDD and certain CSRD provisions.

3. Impacts of CSRD and CSDDD

• CSRD: Enhanced reporting expectations for investors regarding sustainability performance, contributing to financial stability.

• CSDDD: Ensures corporate accountability towards human rights and environmental standards.

Amendments to Reporting Requirements

1. Changes to CSRD Requirements

• Postponement of reporting requirements:

  • Large undertakings and SMEs’ deadlines shifted forward by two years.

    • From Jan 2025 to Jan 2027 for large undertakings not classified as public interest.

    • SMEs with publicly traded securities to report from Jan 2028 instead of Jan 2026.

• Value Chain Reporting:

  • Undertakings are limited in requesting information from SMEs in their value chain.

• Report Assurance:

  • Clarifying assurance standards and reviewing the necessity for limited vs reasonable assurance.

2. Changes to CSDDD Requirements

• Transposition Deadlines:

  • Postponed by one year for initial group obligations, granting companies additional preparation time.

  • Ensures alignment with upcoming guidelines from the Commission.

Legal Basis and Subsidiarity

1. Legal Foundation

• Based on Articles 50 and 114 of TFEU, focusing on single market functionality.

2. Subsidiarity and Proportionality

• Directive modifications require EU level actions, ensuring consistency and effectiveness.

Stakeholder Consultations

• Various consultations revealed a strong call for simplification of reporting requirements across sectors.

• Emphasis on the importance of regulatory clarity combined with the need for maintaining sustainability efforts.

Expected Outcomes and Performance Indicators

1. Expected Results

• Administrative Burden: Reduction in reporting workload across various sectors.

• Business Compliance: Enhanced time for companies to prepare for compliance with sustainability directives.

2. Performance Monitoring

• The Commission will assess progress through exchanges and stakeholder surveys, monitoring the impact on reporting efficiency and business burden.

Financial and Digital Implications

1. Financial Impact

• The proposal aims to relieve financial strain on companies without budgetary implications.

2. Digital Reporting

• Emphasis on digital solutions for sustainability reporting, including future tagging and machine-readable formats to enhance accessibility.