{"id":5529,"date":"2025-05-26T11:07:39","date_gmt":"2025-05-26T09:07:39","guid":{"rendered":"https:\/\/riediger-legal.com\/2025\/05\/26\/eu-reform-package-on-sustainability\/"},"modified":"2025-05-26T11:07:39","modified_gmt":"2025-05-26T09:07:39","slug":"eu-reform-package-on-sustainability","status":"publish","type":"post","link":"https:\/\/riediger-legal.com\/en\/2025\/05\/26\/eu-reform-package-on-sustainability\/","title":{"rendered":"EU reform package on sustainability"},"content":{"rendered":"

The Corporate Sustainability Due Diligence Directive (\u201cCSDDD\u201d)<\/strong><\/span> is an EU directive that aims to ensure that companies would take responsibility for human rights and adequate application of environmental protection standards in their supply chains. This Directive is part of the Green Deal and the EU\u2019s strategy for sustainable corporate governance<\/strong>.<\/p>\n

Under the CSDDD (also known as \u201cthe EU Supply Chain Directive\u201d), large companies in the EU are required to identify, prevent, mitigate and report on human rights and environmental risks across their operations and value chains.<\/p>\n

The directive applies to: companies established in the Union with more than 1,000 employees<\/strong> and a net worldwide turnover exceeding EUR 450 million.<\/strong> In addition, this Directive applies to third-country companies if they generate a net turnover of at least EUR 450\u00a0million in the Union.<\/p>\n

In contrast, there were earlier drafts proposing stricter limits and thresholds \u2013 however, these were softened during the trilogue negotiations (between the Parliament, Council, and Commission) \u2013 for more, please see the reform package further down in the article.<\/p>\n

What exactly do companies need to do now?<\/strong><\/p>\n

    \n
  1. Introduce due diligence processes and procedures to identify risks related to human rights <\/strong>(e.g. forced labour, child labour) and environmental protection<\/strong> standards <\/strong>(e.g. deforestation, toxic chemicals) in their supply and value chains.<\/strong><\/li>\n
  2. Take countermeasures <\/strong>in the event of identified violations (e.g. change suppliers, adjust contracts, offer support).<\/li>\n
  3. Fulfil reporting obligations <\/strong>and make the measures public.<\/li>\n
  4. Introduce a complaints procedure <\/strong>through which affected parties can report any concerns and issues.<\/li>\n<\/ol>\n

    What happens in the event of violations?<\/strong><\/p>\n

      \n
    1. High fines <\/strong>(calculated as a percentage of turnover) may be imposed,<\/li>\n
    2. Companies may also be held liable under civil law <\/strong>(e.g. for damages caused by suppliers if sufficient due diligence activities cannot be proven).<\/li>\n<\/ol>\n

      The CSRD stands for Corporate Sustainability Reporting Directive (CSRD)<\/strong> <\/span>and is an EU directive on sustainability reporting<\/strong> for companies. It supplements and replaces the previous Non-Financial Reporting Directive (NFRD) \u2013 and significantly expands the obligations.<\/p>\n

      Under the CSRD<\/strong>, companies are required to prepare and disclose standardised reports on environmental, social and governance (ESG) aspects. It puts sustainability on an equal footing with financial reporting. It applies gradually to companies based in the EU or with significant turnover in the Union.<\/p>\n

      Companies must prepare their reports in compliance with the double materiality <\/strong>principle: the impact of the company\u2019s activities on the environmental and social matters (e.g. CO\u2082 emissions, human rights, biodiversity) and the influence of sustainability factors on the company (e.g. climate risks for the business model).<\/p>\n

      The reports must be prepared in accordance with the new ESRS standards<\/strong> (European Sustainability Reporting Standards) \u2013 binding, verifiable and comparable. Among others, they must include greenhouse gas emissions (Scope 1\u20133), energy use, environmental objectives, diversity within the company, working conditions & employee rights, governance & anti-corruption, climate risks and adaptation strategies.<\/p>\n

      The CSRD makes sustainability measurable, comparable and verifiable<\/strong>. In future, companies will have to treat sustainability in the same way as finance \u2013 with clear KPIs, risk analyses and transparency requirements.<\/p>\n

      2025 \u2013 a comprehensive reform package\u2026<\/span> <\/strong><\/p>\n\n\n\n\n
      \"\"<\/td>\n<\/tr>\n
      <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      In February 2025, the EU Commission presented a comprehensive reform package known as \u201cOmnibus I\u201d (ESG) and \u201cOmnibus II\u201d (investments). The aim is to simplify sustainability reporting (CSRD) and due diligence processes in supply chains (CSDDD) while maintaining the EU\u2019s sustainability goals.<\/p>\n

      Here is an overview of the most important changes<\/p>\n

      CSRD \u2013 Sustainability reporting<\/strong><\/p>\n

        \n
      • Postponement of reporting requirements: The introduction of reporting requirements for large companies (second wave) will be postponed by two years to the year 2027.<\/li>\n
      • Reduced scope of application: In future, only large companies will be required to meet this reporting duty, i.e. companies with more than 1,000 employees and a turnover exceeding EUR 50 million or a balance sheet total of more than EUR 25 million.<\/li>\n
      • Voluntary reporting standards for SMEs: For smaller companies to that the CSRD does not apply, a voluntary reporting standard based on the VSME standard will be introduced.<\/li>\n
      • Revision of the ESRS: The European Sustainability Reporting Standards (ESRS) are to be revised, and the number of required information reduced.<\/li>\n
      • No sector-specific standards: The development and implementation of sector-specific reporting standards will not be pursued further.<\/li>\n<\/ul>\n

        CSRD \u2013 Sustainability reporting<\/strong><\/p>\n

          \n
        • Postponement of implementation: The application of due diligence obligations for large companies will be postponed by one year to July 2028.<\/li>\n
        • Focus on direct business partners: Due diligence obligations will be aimed at direct business partners (Tier 1 suppliers) in order to reduce the burden on companies.<\/li>\n
        • Cancellation of liability rules: The harmonised EU conditions for civil liability will be deleted, while the right of victims to compensation will be maintained.<\/li>\n<\/ul>\n

          \n","protected":false},"excerpt":{"rendered":"

          The Corporate Sustainability Due Diligence Directive (\u201cCSDDD\u201d) is an EU directive that aims to ensure that companies would take responsibility for human rights and adequate application of environmental protection standards in their supply chains. This Directive is part of the Green Deal and the EU\u2019s strategy for sustainable corporate governance. Under the CSDDD (also known […]<\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[35,38],"tags":[],"class_list":["post-5529","post","type-post","status-publish","format-standard","hentry","category-d-en","category-legal-en"],"acf":[],"yoast_head":"\nEU reform package on sustainability - RIEDIGER. legal | tax Rechtsanwaltsgesellschaft mbH<\/title>\n<meta name=\"description\" content=\"The EU Commission presented a comprehensive reform package in February 2025. 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