Key takeaways

EU co-legislators reached a provisional deal to update the CSRD and CSDDD

The EU Parliament and Member State negotiators reached a deal on the revision of CSRD and CSDDD. The final draft is not yet available, but based on the press release and press conference held on 9 December 2025, the key takeaways are as follows:

1. CSRD

• Scope:
  • EU Companies: >1,000 employees and EUR 450 million net worldwide turnover.
  • Non-EU Companies: >EUR 450 million net turnover in the EU.
• Exemptions: Listed Small and Medium-sized Enterprises (SMEs) and Financial Holding undertakings exempted.
• Creation of a digital one-stop-shop for templates and guidelines.
• Value chain cap: Companies with < 1,000 will have statutory right to refuse providing information that goes beyond the voluntary SME standards.

2. CSDDD

• Scope:
  • EU companies: > 5,000 employees and a net annual turnover of over EUR 1.5 billion.
  • Non-EU companies with > EU turnover of over EUR 1.5 billion.
• Timeline: delayed by a year (transposition July 2028; compliance July 2029).
• Due diligence scope: risk-based approach (no comprehensive exercise), based on more severe risks based on available information, and companies should not request unnecessary information from companies not included in the scope.
• Climate transition plan: No longer required.
• Civil liability: No EU harmonized regime. Civil liability will be governed by member state law and fines up to 3% of worldwide turnover (guidance to be released by Commission).

European Financial Reporting Advisory Group (EFRAG) delivered the revised ESRS

The EFRAG held its annual conference in Brussels (4 December 2025) and delivered its technical advice on the draft simplified ESRS (“Revised ESRS”). We attended the event and summarized the key takeaways below:

1. Introduction — simplifying ESRS

• Mandate: On 3 December 2025, EFRAG published its Revised ESRS, building on the July 2025 Exposure Drafts and incorporating (i) lessons learned from “Wave 1” reports, and (ii) stakeholder feedback from the public consultation. The revision is a key simplification goal of the Omnibus proposal. Under the European Commission’s 2025 Omnibus initiative, EFRAG was requested to simplify ESRS to reduce the burden while preserving ambition, interoperability and usability. EFRAG delivered its final technical advice (12 draft simplified ESRS with mark-ups and glossary) and presented it publicly at the conference.
• What changed at a high level: The Revised ESRS streamline double materiality, reinforce ESRS as a “fair presentation” framework (aligned with IFRS S1/S2), ease value-chain data expectations (allowing estimates), and reduce data points (mandatory down by approx. 57–61%; total down by around 68%).

2. Technical advice — part one (cross cutting)

• Fair presentation: The draft clarifies ESRS as a fair presentation framework, strengthening materiality across disclosures and aligning terminology with IFRS S1/S2.
• Executive summary: An optional front section tailored for boards/C-suite; detailed metrics can move to appendices to improve readability.
• “Undue cost or effort” proportionality: Relief introduced for evidence gathering and select metrics; balanced by transparency expectations for users.
• Various Digital Markets Act (DMA) simplification: Clearer top-down and bottom-up pathways, allowing the use of a top-down approach without requiring companies to assess every possible impact, risk and opportunity (IRO) across their operations and value chain; less documentation; focus on obvious material topics; improved linkage between ESRS 2 and topical standards; option to exclude non-material activities of subsidiaries from metric calculation where they are unlikely to significantly affect material IROs.
• Relief for acquisitions and disposals: Relief for DMA and reporting boundaries for acquired and disposed subsidiaries or businesses.
• More streamlined: Reduced overlap between general and topical standards; more principles-based narrative requirements for policies, actions and targets (PAT).
• Value chain data: Elimination of the preference for direct data over estimates in value-chain reporting, in line with the changes proposed to CSRD by legislators.
• Datapoints & digital: Updated list of datapoints (Implementation Guidance (IG) 3) will follow the technical advice; a new eXtensible Business Reporting Language (XBRL) taxonomy for the simplified ESRS is planned in line with EFRAG’s digital approach.
• Guidance refresh: IG1/IG2 to be refreshed; all implementation support centralized in the Knowledge Hub.
• Phase-ins: Phase-in reliefs for (i) quantitative disclosures on anticipated financial effects, and (ii) substances of concern until 2029 is drafted to apply to “Wave 1” companies, in addition to the relief already granted under the Commission’s “Quick fix” Delegated Regulation. EFRAG explicitly invites the Commission to consider extending these phase ins to “Wave 2” companies in the Delegated Act adopting the Revised ESRS.
• Timing: Commission intends to adopt in H1 2026; early application for FY 2026 may be permitted, with mandatory application widely expected from FY 2027 (subject to the Delegated Act).
• Voluntary Sustainability Standards for SMEs (VSME): VSME (voluntary) is positioned as a popular choice for non CSRD companies.

3. Technical advice — part two (topical standards)

• Alignment: “Interoperability is the Erasmus program for standard setters.” Stronger alignment with IFRS S2 on transition disclosures and anticipated financial effects; expect updated IFRS–ESRS interoperability guidance post adoption.
• GHG Protocol alignment: Clarifications to GHG boundary and related definitions.
• Previously “hidden” datapoints made explicit: Pollution (E2) now requires items like secondary microplastics more explicitly.
• Human rights disclosures: Certain human rights elements re anchored in cross cutting/general standards to reduce duplication.
• Adequate wages outside of the EU anchored to ILO living wage principles: ESRS S1’s “adequate wages” concept aligns with the ILO’s 2024/2025 living wage principles; companies should prepare to evidence methodology/benchmarks.
• Gender pay gap: Unadjusted gap retained; adjusted gap can be provided as entity specific disclosure. (Final wording remains subject to the Delegated Act adopting the Revised ESRS.)
• Climate transition plan: Limited changes to the Deforestation Regulations (DRs) relating to the climate transition plan, e.g., information on the climate transition plan must include the approval of the plan by the administrative, management and supervisory bodies.
• Commission can introduce changes: The Commission may refine EFRAG’s proposals in the Delegated Act.

4. Launch — ESRS Knowledge Hub

• A free, interactive portal that centralizes adopted 2023 ESRS, the draft simplified ESRS technical advice, IG1/IG2/IG3, VSME ecosystem, meeting materials, glossaries and digital tools. You can access the ESRS Knowledge Hub here.
• Designed to improve accessibility, cross references and connectivity (incl. XBRL), reducing complexity for preparers and auditors.

Next steps

On the Omnibus proposal, Council Ambassadors (COREPER) are expected to approve the agreed mandate on 10 December 2025, and the file will be sent to the EU Parliament’s legal affairs committee ("JURI Committee") for voting on 11 December 2025. On 16 December, Parliament’s plenary will vote on the JURI Committee approved mandate during its plenary session. A final position is therefore likely before Christmas (pending publication in Official Journal).

On the ESRS, the EU Commission will now prepare a draft Delegated Act amending the ESRS based on EFRAG’s technical advice. The EU Commission is expected to launch another public consultation in early 2026 during which stakeholders can provide feedback on such draft Delegated Act. Once the EU Commission has adopted the Delegated Act, the EU Parliament and Council will have the opportunity to scrutinize the Delegates Act and provide any objections. This scrutiny period is generally two months but may be extended. If no objections are raised, the Delegated Act and hence the updated ESRS will be published in the Official Journal and enter into force.

For more information, please contact our team of experts.