EU: Parliament Approves Simplified Sustainability Reporting and Due Diligence Requirements
On December 9, 2025, the European Parliament and Council reached a provisional agreement to simplify the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). On December 16, the European Parliament formally adopted the deal in a plenary vote.
Under the text approved by Parliament, social and environmental reporting is only required for EU companies employing on average over 1,000 employees and with a net annual turnover of over €450 million. The net turnover threshold was also increased for non-EU companies to €450 million generated in the EU for sustainability reporting. Reporting requirements have been made more quantitative, while sector-specific reporting is voluntary. Companies with under 1,000 employees are protected from shifting responsibility for reporting, as the updated rules allow them to refuse reporting information beyond what is set out in the voluntary standards.
As for sustainability due diligence requirements, the scope only includes large corporations with more than 5,000 employees and a net annual turnover of over €1.5 billion. Companies are no longer required to prepare a transition plan to make their business model compatible with the Paris Agreement. They will remain liable for non-compliance at the national level rather than the EU level, and could face fines of up to 3% of their net worldwide turnover.
The final text will now have to be formally approved by the Council. The directive will enter into force 20 days after its publication in the Official Journal of the European Union.
EU: Revised Trade Rules to Incentivize Sustainability in Developing Countries
The EU’s Generalized Scheme of Preferences (GSP) removes import duties from products coming into the EU market from vulnerable developing countries. On December 1, 2025, the European Commission, the European Council and the European Parliament reached an agreement on a revision of the GSP.
The revised GSP will:
- Ensure a smoother transition for countries that are moving up in their development status by allowing them to retain preferential EU market access if they meet sustainability standards.
- Create more opportunities for low-income countries by lowering product graduation thresholds.
- Promote stronger human rights and labor standards by adding new conventions to the list of required compliance.
- Introduce the possibility to withdraw benefits for environmental and climate violations.
- Improve monitoring, transparency, and civil society involvement, and introduce an urgent withdrawal procedure.
- Make beneficiary countries responsible for readmitting their own nationals in case of illegal migration issues.
The provisional agreement will now be endorsed by the Council and the Parliament before being formally adopted. The legislation will apply from January 1, 2027.