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      November 2025 update: The EU continues to discuss reducing the scope of the CSRD1 to the very largest companies by the end of 2025.

      This article was published on 27 February 2025. It was last updated on 13 November 2025 to reflect these changes.

      Highlights

      – Number of companies in scope significantly reduced

      – Changes to reporting under ESRS

      – Other key changes

      – What's next?

      – Actions for management

      The European Parliament has agreed its position on reducing sustainability reporting and due diligence requirements.

      Its proposed changes to the CSRD would limit reporting under ESRS2 and the EU Taxonomy to only the largest companies. Even fewer companies would implement the CSDDD3.
       

      Mark Vaessen
      Mark Vaessen

      Partner

      KPMG in the Netherlands

      The Parliament has proposed to reduce the number of companies in scope of the CSRD to five percent of the original population. This marks a significant shift from the initial ambition, reflecting the political momentum in Brussels towards removing reporting requirements on companies.

      Mark Vaessen

      Chair, Global Corporate & Sustainability Reporting Topic Team

      Number of companies in scope significantly reduced

      The Parliament’s position on the European Commission’s Omnibus package of proposals, released earlier this year, goes further than the Council of the EU’s proposal.

      table

      Changes to reporting under ESRS

      In early 2025, the Commission announced plans to streamline ESRS and reduce the number of required disclosures. Developments since then include:

      • The Commission mandated EFRAG4 to advise on simplifying ESRS. EFRAG is currently redeliberating its proposals following a public consultation. Read our guide on its proposed changes and KPMG’s response to the consultation.
      • First-wave companies will report under the current version of ESRS for the FY25 period. Additional reporting requirements – such as anticipated financial effects – have been paused under the Commission’s quick fix amendments

      Other key changes

      • Companies in scope would also need to report under the EU Taxonomy. The EU Taxonomy is undergoing amendments already adopted by the Commission, but still subject to the EU’s due process. Read more in our article.
      • Standards for non-EU companies are delayed until at least October 2027. However, non-EU companies in scope of the CSRD are still required to report in 2029 for FY28.
      • Only companies with more than 5,000 employees and EUR 1.5bn in net turnover would be subject to the amended CSDDD. They would start applying CSDDD in 2028 – a deferment of one year. This would significantly reduce the number required to identify and address modern slavery, forced labour and environmental harm in their operations and supply chains.
      • In addition, the CSDDD requirement to implement climate transition plans and the need to comply with stricter rules on human rights and environmental abuses in supply chains would be removed.
      • Other changes proposed by the Parliament include:

      What's next?

      • Trilogue negotiations to agree on a final legal text with the Council and Commission will begin on 18 November.
      • Once agreed, changes to both the CSRD and CSDDD will be published in the Official Journal of the EU. Member states then have 12 months to transpose them into national laws.
      • To allow time for this, the Commission has delayed mandatory ESRS reporting for second- and third-wave companies by two years under its ‘Stop the Clock’ directive.
      • We’ll continue to monitor the developments – follow KPMG IFRS on LinkedIn for further updates.

      Actions for management to take

      • Review the proposed threshold changes to CSRD and CSDDD to understand how they would affect your company’s reporting obligations;
      • Monitor ongoing developments in the ESRS simplification process; and
      • Prepare for an initial gap assessment based on EFRAG’s advice.

      1  Corporate Sustainability Reporting Directive

      2  European Sustainability Reporting Standards

      3  Corporate Sustainability Due Diligence Directive

      4 The advisory body to the EU on corporate reporting

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