CSRD update: European Parliament moves to cut back corporate sustainability reporting requirements
The European Parliament’s decision yesterday (13 November) to reduce CSRD and CSDDD reporting requirements, while anticipated, does not change the fundamental business case for sustainable growth – transparency and transition planning remains the most powerful strategic asset for minimising future business risk. Tamara Evan, Senior Product Manager at Risilience, sets out what the decision means for business.
The leading argument that drove this outcome was that the original, rigorous standards threatened Europe’s economic competitiveness, despite protesting statements from opposing parties. The decision continues to face scrutiny; over 100 legal academics have warned the legal affairs committee that the deregulation of these standards proceeded without a proper impact assessment on member states, potentially opening the door to future legal action.
In terms of what this means for business, CSRD will now apply to a much smaller category of companies, those with more than 1750 FTE and over €450 million in turnover. It has been announced that final details will be confirmed via trilogue negotiations, with a new, simplified standard expected by the end of the year.
Business matters
This decision heralds a major change in how sustainability fits into business planning, as regulation is one of the most significant levers for driving sustainable business practices.
Yesterday’s vote brings an end to this period of uncertainty but does not yet provide total clarity to businesses in scope. It will be months yet until the exact terms of the new standard are known. The latest development follows the tireless efforts and significant investment that companies put into Phase 1 of CSRD, many of whom now no longer sit within the scope.
That said, this effort is not in vain. Having already built the necessary data flows to support disclosure, many organisations will recognise the strategic value in transparency and the need to understand climate and nature risk exposure in financial terms to inform commercial decision-making.
The CSRD may have been scaled back, but regulatory pressure has by no means disappeared. While Europe has deliberated, other global ESG reporting standards requiring quantification of transition and physical risk from climate change have gained profile and broadened in scope.
Also, while the number of mandatory reporters has significantly decreased, the pressure on their supply chains will intensify. A new secondary market of suppliers and partners will now face strategic pressure to provide sustainable products, services and the data to prove it, supporting the disclosures of their larger, in-scope customers. In short, even if an organisation is no longer in scope, it remains affected if its largest trading partner still is.
Transition planning key to reducing risk
Transparency and transition planning remains the most powerful strategic asset for minimising future climate and nature-related risk. For the many businesses that have already quantified their climate risk, either for CSRD or IFRS, transition planning is the logical and critical next step.
The biggest takeaway is this: political tides may change, but climate change and its risks to business are a certainty.
If companies want to win in the long-term, the direction of travel remains clear – make the commitment to execute a strategic and commercially-minded transition to a more resilient and sustainable business model.
Meet Risilience at: Responsible Supply Chain Conference, online, 17-18 November 2025. The Risilience team will be presenting and participating on panels at this EU-centric event for business leaders, policymakers and regulators to explore the evolving sustainability landscape and build resilient supply chains.