Changes to CSRD and CS3D: What Companies Need to Know

In summer 2025, the EU adopted significant amendments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The aim of these changes is to reduce the burden on companies without compromising the EU’s sustainability and human rights objectives. The new regulations affect thresholds, reporting obligations, and due diligence requirements – with considerable implications for Governance, Risk Management, and Compliance (GRC).

Key Takeaways

• Higher thresholds for CSRD and CS3D applicability
• Removal of reporting obligations for listed SMEs
• Risk-based approach to due diligence
• Extended implementation deadline until July 26, 2028
• Goal: Reduce bureaucracy while maintaining sustainability and human rights standards

Why the Changes Were Introduced

The original requirements of CSRD and CS3D drew criticism, particularly from mid-sized companies and industry associations. Main concerns included excessive administrative workload, lack of resources for implementation, and insufficient consideration of sector-specific risks. The EU responded with a revision that makes the requirements more risk-oriented and less administratively demanding, while keeping the core objectives intact.

What Has Changed

1. Higher Thresholds

The turnover and employee thresholds that determine whether the directives apply have been raised. This means fewer companies are subject to reporting and due diligence obligations.

2. Removal of Reporting Obligations for Listed SMEs

Listed small and medium-sized enterprises (SMEs) are no longer required to produce detailed sustainability reports under the CSRD.

3. Risk-Based Due Diligence

Companies must now implement due diligence primarily where human rights and environmental risks are highest. This enables a more targeted and resource-efficient approach.

4. Extended Implementation Deadline

The deadline for implementing the directives has been extended to July 26, 2028, giving companies more time to adapt their processes and systems.

Impact on Governance, Risk & Compliance

These changes highlight the growing importance of integrated GRC strategies. Companies that proactively align their governance and risk management processes with the new requirements will not only ensure compliance but also gain competitive advantages.
A risk-based approach also means companies must enhance their risk assessment processes – covering everything from supply chain oversight to internal operations and strategic decision-making.

Conclusion

By adjusting the CSRD and CS3D, the EU is addressing valid concerns from businesses without abandoning its ambitious sustainability goals. For companies, this is an opportunity to refine their sustainability and compliance strategies in a more focused and efficient way.

FAQ

1. What is the CSRD?
The Corporate Sustainability Reporting Directive requires certain companies to disclose their sustainability and ESG data.

2. What is the CS3D?
The Corporate Sustainability Due Diligence Directive establishes due diligence obligations for companies to prevent human rights and environmental violations throughout their value chains.

3. Which companies are affected by the changes?
Primarily mid-sized companies, listed SMEs, and businesses with international supply chains.

4. Why is the EU adopting a risk-based approach?
To direct resources to areas with the highest risks while reducing administrative burdens.

5. How should companies prepare?
By reviewing internal risk assessments, updating GRC processes, and integrating the new requirements into their overall strategy early on.