Stockholm (NordSIP) – On Monday, the representatives of EU Member States’ governments agreed on the negotiating mandate of the Council of the European Union regarding the proposed simplification of sustainability regulations. The negotiating mandate is the Council’s response to ‘Omnibus I’ package adopted by the Commission on 26 February 2025 to simplify EU legislation in the field of sustainability. The Council highlighted changes to two main directives: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainable Due Diligence Directive (CS3D).
“Today we delivered on our promise to simplify EU laws. We are taking a decisive step towards our common goal to create a more favourable business environment to help our companies grow, innovate, and create quality jobs,” Adam Szłapka, Minister for the European Union of Poland.
The Council’s Positions
Regarding the application of the CSRD, the Council’s position adds the requirement of net turnover threshold of over €450 million to the Commission’s proposal of increasing the employee threshold to 1000 employees and remove listed SMEs from the scope of the directive.
Regarding the scope of application of the CS3D, the Council’s position increases the thresholds to 5000 employees and €1.5 billion net turnover.
Regarding the identification and assessment of actual and potential adverse impacts, the Council’s mandate changes the focus from the Commission’s proposed entity-based approach to a risk-based approach. Thus instead of, the Commission’s proposing that due diligence requirements be limited to a the operations of given company, those of its subsidiaries, and those of its direct business partners, the Council proposes that companies should more general analysis of areas where actual and potential adverse impacts are most likely to occur. The due diligence exercise “should no longer be required to carry out a comprehensive mapping exercise, but instead, conduct a more general scoping exercise.”
The Council’s position also adds limits to companies’ obligation to adopt transition plans for climate change mitigation. “The Commission’s proposal simplifies the provisions on transition plans for climate change mitigation by aligning them with the CSRD. The obligation to put into effect these plans is replaced by a clarification that this transition plan includes outlining implementing actions (planned and taken). In addition, the Council in addition limits the obligation for companies to the adoption of a transition plan for climate change mitigation and empowers supervisory authorities to advise companies on design and implementation of those plans.” The Council also postpones the obligation to adopt transition plans by two years
Regarding civil liability, the Council’s mandate maintains the Commission’s proposal to remove the EU harmonised liability regime and the requirement for member states to ensure that the liability rules are of overriding mandatory application in cases where the applicable law is not the national law of the member state.
The Council mandate also postpones the CS3D’s transposition deadline by one year, to 26 July 2028.
Next Steps
Following this announcement, the presidency of the Council of Ministers will start negotiations with the European Parliament, once that institution reaches its own negotiating position. Once both legislative European bodies reach an agreement, the new law will come into effect..
