A pivotal date for ESG regulation
November 13, 2025, will be remembered as a pivotal date for European companies and ESG regulation. On that day, the European Parliament voted to simplify the CSRD and CS3D directives, with 382 in favour and 249 against. This decision significantly alters companies’ social and environmental transparency obligations, narrowing their scope to the largest organisations and removing the requirement for a transition plan aligned with the Paris Agreement. To fully understand these changes, it is useful to revisit the history of these two directives.
The Origins: NFRD and the path to CS3D
The story begins in 2014 with the Non-Financial Reporting Directive (NFRD), the first European legislation aimed at enhancing corporate ESG transparency. It required large companies to disclose information on their environmental, social, and governance impacts. In April 2020, European Commissioner Didier Reynders introduced a legislative proposal to expand corporate responsibility for human rights and the environment across Europe, laying the groundwork for what would become the CS3D.
CS3D and CSRD: strengthening corporate responsibility
The CS3D, or Corporate Sustainability Due Diligence Directive, was adopted on April 24, 2024. It required companies with more than 1,000 employees and a turnover exceeding €450 million to implement vigilance mechanisms to identify and prevent ESG risks throughout their value chain. Simultaneously, the CSRD, or Corporate Sustainability Reporting Directive, adopted under Directive 2022/2464, extended non-financial reporting obligations to all large companies—initially those with over 250 employees and a turnover above €50 million, encompassing roughly 50,000 companies. The objective was clear: to strengthen transparency and accountability of European companies in line with the Green Deal.
The Omnibus package and pushback
In February 2025, the European Commission proposed the Omnibus package to simplify and streamline the CSRD and CS3D directives. This initiative faced criticism from many NGOs and civil society actors, who saw it as favouring industrial lobbies. Some business representatives, such as French Medef, argued that the duty of care was overly ambitious given operational realities. In April 2025, the ‘Stop the Clock’ mechanism postponed the entry into force of the directives, giving companies additional time to prepare. Waves two and three of the CSRD were delayed by two years, and the CS3D transposition by one year.
Scope reduction and new thresholds
On June 23, 2025, the Council of Europe and Member State representatives approved the Omnibus package, significantly reducing the scope of obligations. The CSRD now applies only to companies with more than 1,750 employees and a turnover exceeding €450 million, while the CS3D applies only to companies with over 5,000 employees and a turnover above €1.5 billion. Additionally, the duty of care is limited to direct partners, and transposition into Member State law is scheduled for July 26, 2028.
Final vote and its implications
On November 13, 2025, the European Parliament confirmed these adjustments. The final vote—382 in favour, 249 against—signals the EU’s retreat on certain ESG obligations, viewed by some experts as a win for industrial players while raising concerns about the future of European regulation. The transition plan to the Paris Agreement, initially intended to guide companies toward climate-compatible economic models, was removed, intensifying the debate between competitiveness and social responsibility.
Opportunities amidst change
Despite these setbacks, the phased implementation of the directives until 2028 provides companies with time to adapt and strengthen their ESG strategies. The CSRD and CS3D remain essential tools for promoting transparency and vigilance, representing an opportunity for companies to position themselves as environmentally and socially responsible. The history of these directives highlights both the tension between regulatory ambition and economic reality, and the key role the European Union plays in shaping a sustainable framework for business.
What to do in such context?
Even if your company is not yet directly subject to the CSRD, managing an ESG approach and publishing its results remains essential to:
- Access favorable financing
- Stand out in the market and respond to tenders from major clients
- Meet stakeholder expectations (clients, investors, consumers, insurers, employees)
- Strengthen your employer brand
In this context, we recommend:
📊 Build or update your ESG roadmap
📈 Launch or update your ESG reporting
🔍 Extract value from the data collected
🤝 Engage your teams and stakeholders to enhance your ESG efforts
⚡ Turn material risks into strategic decisions and concrete actions to make your activities resilient, innovative, and attractive
➔ Contact us to define your sustainability strategy and/or your non-financial reporting.
