Simplification of the EU's Sustainability Reporting Legislation

Following the European Commission's proposal dated 8 December 2025, a provisional agreement has been reached between the Council of the European Union and the European Parliament (EP) on simplifying the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD/CS3D).

04.03.2026

Dear Members,


The Turkish Union of Chambers and Commodity Exchanges (TOBB) has forwarded a letter to our Association, originating from the Ministry of Trade, sharing information about an important development regarding European Union legislation.


The letter states that, within the framework of the Omnibus 1 regulation prepared under the European Commission's proposal dated 8 December 2025, a provisional agreement has been reached between the European Council and the European Parliament regarding the simplification of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.



The key points in this regard are summarised below:

1. Scope of the CSRD

Reporting obligations under the CSRD apply to:

  • EU companies with an average of more than 1,000 employees and an annual net turnover exceeding €450 million, as well as
  • companies established outside the EU but with a net turnover exceeding €450 million in the EU, and
  • subsidiaries and branches generating a turnover exceeding €200 million in the EU.


2. Transition Period

A transition exemption covering 2025 and 2026 is envisaged for first-wave companies subject to reporting obligations from the 2024 financial year onwards.

Furthermore, exemptions from consolidated reporting obligations may apply to certain EU and non-EU financial holding companies.


3. Scope of the CSDDD

  • The corporate sustainability due diligence obligation will be mandatory for large EU companies with over 5,000 employees and an annual net turnover exceeding 1.5 billion euros, as well as non-EU companies exceeding the same turnover threshold within the EU.


4. Expectations Regarding the Reporting Process

In the reporting process, companies are expected to:

  • Focus on the most likely risk points when assessing adverse impacts,
  • Prioritise the assessment of the impacts of primary business partners in particular when identifying adverse impacts,
  • Base their assessments on reasonably available information.

This approach aims to prevent excessive information requests from being made to small business partners and to make the reporting process more feasible.


5. Transition Plan Obligation

The obligation for companies to prepare a transition plan aimed at aligning their business models with the transition to a sustainable economy has been removed.


6. Sanctions

In the event of non-compliance with the legislation, liability will be enforced at national level rather than EU level. In this context, the maximum penalty that may be imposed is capped at 3% of the company's global net turnover.


7. Implementation Timetable

  • Member States must transpose the CSDDD into their national legislation by 26 July 2028.
  • The provisions of the Directive will apply to all businesses from 26 July 2029 onwards.


Attachment: Cover letter from the Ministry of Trade