The Commission's proposal for CSRD largely preserved the original scope, applying to companies with 1,000 employees and €50 million turnover, while removing mandatory sector-specific standards.

The Council's position introduces more substantial changes. It raises the turnover threshold to €450 million, which significantly reduces the number of companies in scope. Sector-specific standards would be replaced by non-binding guidelines, shifting from prescriptive requirements to a more flexible framework.

The Parliament goes even further, proposing thresholds of 1,750 employees and €450 million turnover, which would exclude a large portion of mid-sized companies from reporting obligations. It also narrows the reporting scope and makes sectoral guidelines voluntary, signalling a move toward greater discretion for companies. These changes collectively point to a substantial reduction in coverage and detail compared to the original directive.

The Commission's proposal for CS3D aimed to maintain the scope initially set by the initial directive, applying to companies with 1,000 employees and €450 million turnover. It required due diligence coverage restricted to direct business partners (tier-1 suppliers), meaning companies would need to identify, prevent, and mitigate adverse human rights and environmental impacts in their own operations and among their immediate suppliers. Additionally, the Commission included a requirement for climate transition plans, mandatory and aligned with the Paris Agreement, based on “best efforts”.

By contrast, the Council and Parliament propose a significantly narrower scope, limiting obligations to very large companies with 5,000 employees and €1.5 billion turnover. This change would substantially reduce the number of companies covered, focusing primarily on multinational corporations. The Council advocates for restricting impact identification to direct business partners, with additional assessment of indirect partners only when based on plausible information, while the Parliament introduces a risk-based approach combined with stricter limits on information requests.

On civil liability, the original directive contemplated an EU-wide regime enabling victims of corporate misconduct to seek redress. This provision has been removed by all three institutions, leaving enforcement to be handled at the national level.

Regarding climate transition plans, the Council requires them to be aligned with the Paris Agreement, based on “reasonable efforts,” while the Parliament removes this requirement entirely.

The trilogue will continue in the coming weeks with the aim of reaching an agreement before year-end. Negotiations are taking place amid competing pressures. The outcome will shape the future scope and ambition of the EU's corporate sustainability framework.

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This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Christelle Coslin, Margaux Renard, Rita Hunter, Julia Cripps, Emily Julier, Christian Ritz, and Felix Werner.