What changed between the draft committee report and the plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

10 unchanged paragraphs

on the proposal for a directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements

(COM(2025)0081 – C100037/2025 – 2025/0045(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2025)0081),

– having regard to Article 294(2) and Article 50 and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C100037/2025),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Economic and Social Committee of ...,

– having regard to Rule 60 of its Rules of Procedure,

– having regard to the opinions of the Committee on Foreign Affairs, Committee on International Trade, Committee on Economic and Monetary Affairs, Committee on Employment and Social Affairs and Committee on the Environment Climate and Food Safety,

Changed:– having regard to the report of the Committee on Legal Affairs (A100000/2025),(A10-0197/2025),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

Changed:Recital 3: (3) Article 26a(1) of Directive 2006/43/EC requires Member States to ensure that statutory auditors and audit firms carry out the assurance of sustainability reporting in compliance with limited assurance standards to be adopted by the Commission. Article 26a(3) of that Directive requires the Commission to adopt those standards by 1 October 2026. Undertakings have raised concerns on the work carried out by the assurance providers and have expressed the need for flexibility in addressing specific risks and critical issues identified in the areas of sustainability assurance. The Commission should duly take into account those concerns when working on the limited assurance standards. ThatThe deadlinelack of 1harmonised Octoberassurance 2026standards shouldis becontributing retainedto inthe orderproblems toexperienced ensureby thatundertakings, undertakingsand knowit whatis totherefore expectof whenthe itutmost comesurgency for the Commission to sustainabilityadopt assurance.a suitable delegated act as planned.

Change 2

Changed:Recital 5: (5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and medium-sized undertakings with securities admitted to trading on an EU regulated market, excluding micro-undertakings, to prepare and publish a sustainability statement at individual level. To reduce the reporting burden on undertakings, the obligation to prepare and publish a sustainability statement at individual level should be reduced to undertakings with an average of more than 30001000 employees and a net turnover of more than EUR 450 000 000 during the financial year. It should be possible to exempt ultimate parent undertakings which are financial holding undertakings not involved in management activities from complying with reporting obligations provided that an operational subsidiary of such undertakings is designated to comply with such obligations.

Change 3

Removed:Recital 6: (6) A balance needs to be found between the objectives of data generation and reduction of administrative burden. Sustainability reporting, including the information referred to in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council9, of undertakings with an average of more than 3000 employees and a net turnover of more than EUR 450 000 000 during the financial year is indispensable to understand the transition to a climate-neutral economy. In the light of the balance to be found between the objectives of data generation and reduction of administrative burden, undertakings within the new scope for sustainability reporting should be able to disclose information referred to in Article 8 of Regulation (EU) 2020/852 in a more flexible way. The Commission should be empowered to set out rules supplementing the reporting regime for those undertakings. It should in particular be clarified that the Commission is empowered to specify the reporting regime for activities that are only partially taxonomy aligned.

Added:Recital 6: deleted / (deleted)

Change 4

Changed:Recital 7: (7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance undertakings that are large undertakings or small and medium-size undertakings – excluding micro-undertakings – with securities admitted to trading on an EU regulated market are subject to the sustainability reporting requirements set out in that Directive, regardless of their legal form. Considering that the scope of individual sustainability reporting should be reduced to undertakings with an average of more than 30001000 employees and a net turnover of more than EUR 450 000 000 during the financial year, that reduction in scope should also apply to credit institutions and insurance undertakings. Moreover, and in order to ensure a level playing field, the applicable thresholds should not differ based on whether undertakings are established in or outside the Union.

Change 5

Removed:Recital 9: (9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking’s own operations and about its value chain. To reach closer alignment with the criteria used to define the terminology used in Directive (EU) 2024/1760, the notion of ‘value chain’ should be replaced by ‘chain of activities’. It is necessary to reduce the reporting burden for undertakings in the chain of activities that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings established in or outside of the Union in its chain of activities that have up to 3000 employees and a net turnover of up to EUR 450 000 000 on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. The reporting undertaking should, however, be allowed to collect from such undertakings in its chain of activities any additional sustainability information that is commonly shared between undertakings in the sector concerned. Where not all the necessary information regarding their chain of activities is available, or such information is incomplete or subject to legal limita…

Added:Recital 7 a (new): (7 a) For the purpose of consistency with this Directive, it is important that financial sector legislation remains coherent with its provisions. In this context, it should be considered whether requirements for the financial sector ought to be framed in a way that does not create an obligation for financial undertakings to obtain any information from undertakings which are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU. It should also be considered whether sector-specific financial services legislation, including delegated acts, guidelines by the ESAs and supervisory expectations, ought to be adapted to take into account the content of this Directive.

Removed:Recital 9 a (new): (9a) Article 19a(2), point (a)(iii), and Article 29a(2), point (a)(iii), of Directive 2013/34/EU require undertakings and groups to include in their management reports and consolidated management reports, respectively, their climate transition plans. In order to avoid disproportionately burdensome requirements, on the one hand, but allow for transparency as regards the transition to a sustainable economy, on the other hand, undertakings should include in their management report information on any transition plans they have, if any.

Added:Recital 9: (9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking’s own operations and about its value chain. It is necessary to provide clarity and reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings with an average of more than 1000 employees and a net turnover of EUR 450 000 000 on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. The reporting undertaking should adopt a risk-based approach, prioritising efforts to gather information on high-risk impacts and sustainability issues commonly associated with its sector and be allowed to collect from such undertakings in its value chain any additional sustainability information that is commonly shared between undertakings in the sector concerned. Where not all the necessary information regarding their value chain is available, or such information is incomplete or subject to legal limitations, the undertakings should be allowed to explain the efforts made to obtain the necessary in…

Removed:Recital 12: (12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of groups with an average of more than 3000 employees and a net turnover of more than EUR 450 000 000, on a consolidated basis, during the financial year.

Added:Recital 9 a (new): (9 a) Until the Commission adopts sustainability reporting standards for voluntary use, undertakings that report sustainability information voluntarily may do so according to the Commission recommendation 2025/4984, which is based on the voluntary standard for SMEs (VSME) developed by EFRAG. To ensure continuity and proportionality, the sustainability reporting standards for voluntary use adopted by the Commission as a delegated act should be based on that recommendation, and should be proportionate and take into account the think small first principle; should use simplified language and modularity allowing for flexibility and progression in the disclosures. The objective of this voluntary standard should be to support companies: (a) providing information that will help satisfy the data needs of undertakings requesting sustainability information from their suppliers; (b) providing information that will help satisfy data needs from banks and investors, therefore helping undertakings in their access to finance; (c) improving the management of the sustainability issues they face, i.e. environmental and social challenges such as pollution, workforce health and safety; this will support their competitive growth and enhance their resilience in the short-, medium- and long-term; and (d) contributing to a more sustainable and inclusive economy.

Removed:Recital 14: (14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to not specify disclosures requiring undertakings to obtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for small and medium-sized undertakings with securities admitted to trading on an EU regulated market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the reporting burden for undertakings in the chain of activities that are not required to report on their sustainability, the sustainability reporting standards should not specify disclosures requiring undertakings to obtain from undertakings in their chain of activities that have up to 3000 employees and a net turnover of up to EUR 450 000 000 on average during the financial year any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability.

Added:Recital 9 b (new): (9 b) Sustainability reporting requirements should not oblige an undertaking to disclose information such as intellectual capital, intellectual property, know-how or the results of innovation that would qualify as trade secrets as defined in Directive (EU) 2016/943 of the European Parliament and of the Council. The reporting requirements provided for in this amending Directive should therefore be without prejudice to Directive (EU) 2016/943.

Removed:Recital 15: (15) Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements in Articles 19a and 29a of that Directive to prepare their management report, or consolidated management report, where applicable, in the electronic reporting format specified in Article 3 of Commission Delegated Regulation (EU) 2019/81511 and to mark up their sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council12, in accordance with the electronic reporting format to be specified in that Delegated Regulation. To provide clarity to undertakings, it should be specified that until such rules on the marking up of sustainability reporting are adopted by way of that Delegated Regulation, undertakings are not required to mark-up their sustainability reporting.

Added:Recital 12: (12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of groups with an average of more than 1000 employees and a net turnover of EUR 450 000 000, on a consolidated basis, during the financial year.

Removed:Recital 16: (16) Article 33(1) of Directive 2013/34/EU specifies that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that certain documents are drawn up and published in accordance with the requirements of that Directive. To provide flexibility for undertakings and reduce their reporting burden, it should be specified that the collective responsibility of the members of the administrative, management and supervisory bodies of an undertaking for compliance with the requirements of Article 29d of that Directive as regards the digitalisation of the management report is limited to its publication in the single electronic format, including the marking up of the sustainability reporting therein.

Added:Recital 12 a (new): (12 a) Directive (EU) 2022/2464 requires undertakings in scope to report sustainability information according to mandatory European Sustainability Reporting Standards (ESRS). In July 2023 the Commission adopted a first set of ESRS. To deliver swiftly on the simplification and streamlining of sustainability reporting the Commission should adopt a delegated act as soon as possible, and at the latest six months after the entry into force of this directive, to revise the first set of ESRS to substantially reform the standards by: (i) removing datapoints deemed least important for general purpose sustainability reporting, (ii) prioritising quantitative indicators over narrative text, (iii) providing clear instructions on how to apply the materiality principle, to ensure that undertakings are only required to report material information, and to reduce the risk that assurance service providers inadvertently encourage undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process, (iv) improving consistency with other pieces of EU legislation, including financial services legislation, (v) ensuring to the greatest extent possible interoperability with global sustainability reporting standards.

Removed:Recital 17: (17) Pursuant to Article 40a(1), fourth and fifth subparagraphs, of Directive 2013/34/EU, a subsidiary in the Union of a third-county undertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the third-country parent undertaking. The criteria used to determine the undertakings subject to reporting obligations, whether formed in accordance with the law of a Member State or as subsidiaries and branches of third-country undertakings, should be aligned and consistent with the scope of Directive (EU) 2024/1760. For reasons of consistency and burden reduction, and in order to ensure a level playing field, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking should be set at undertakings with more than 3000 employees and with a net turnover of more than EUR 450 000 000, whilst the net turnover criteria for the branch should be raised from EUR 40 000 000 to EUR 450 000 000.

Added:Recital 12 b (new): (12 b) To better clarify the demands made to financial holding undertakings that are parent undertakings, only these are exempted from complying with the obligations set out in this directive. Likewise, to decrease the administrative burden on undertakings, for recent acquisitions of subsidiaries that are not reporting yet, parent undertaking should benefit of a 24 months transition period.

Change 6

Changed:Recital 18:13: (18)(13) Article 5(2),29b(1), firstthird subparagraph, of Directive (EU) 2022/24642013/34/EU specifiesempowers the dates byCommission whichto theadopt Membersector-specific Statesreporting arestandards toby applyway theof sustainabilitydelegated reportingacts, requirementswith seta outfirst inset Directiveof 2013/34/EU,such withstandards differentto datesbe dependingadopted onby the30 sizeJune of2026. theTo undertakingavoid concerned.an Consideringincrease thatin the scopenumber of the individualprescribed sustainabilitydatapoints reportingthat requirementsundertakings should bereport, reducedthat toempowerment includeshould onlybe undertakingsremoved. withThe moreCommission thanshould 3000instead employeesissue andvoluntary asector-specific netguidelines turnoverto ofsupport moreundertakings thanand EURauditors 450in 000assessing 000their onrisks, averageopportunities duringand theimpacts financialin year,specific andsectors, thatto facilitate the scopeapplication of the consolidated sustainabilityESRS reportingwithin requirementsa shouldgiven besector, reducedto accordingly,identify the criteriasustainability formatters determininglikely theto datesbe ofmaterial applicationfor shoulda bespecific adjusted,sector and the reference to small and medium-sizedreduce undertakingsthe withburden securitiesof admittedreporting. toThose tradingguidelines onshould anbe EUbased regulatedon marketconsultation shouldwith berelevant removed.stakeholders.

Change 7

Changed:Recital 19:14: (19)(14) Article 5(2), third subparagraph,29b(4) of Directive (EU)2013/34/EU 2022/2464requires specifiessustainability thereporting datesstandards byto whichnot thespecify Memberdisclosures Statesrequiring areundertakings to applyobtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting requirementsstandards setfor outsmall inand Directivemedium-sized 2004/109/EC,undertakings with different datessecurities dependingadmitted onto thetrading sizeon ofan theEU issuerregulated concerned.market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the scopereporting ofburden for undertakings in the individualvalue chain that are not required to report on their sustainability, the sustainability reporting requirementsstandards should benot reducedspecify disclosures requiring undertakings to includeobtain onlyfrom undertakings within moretheir thanvalue 3000chain that have up to 1000 employees and a net turnover of more than EUR 450 000 000 on average during the financial year,year andany thatinformation thethat scopegoes ofbeyond the consolidated sustainability reporting requirementsinformation shouldto be reduced accordingly, the criteriadisclosed forpursuant determiningto the datessustainability ofreporting applicationstandards shouldfor bevoluntary adjusted,use andby theundertakings referencethat toare smallnot andrequired medium-sizedto undertakingsreport shouldon betheir removed.sustainability.

Change 8

Removed:Recital 20: (20) Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing, in their national law, provisions within the field covered by the Directive laying down human rights and environmental due diligence obligations diverging from those laid down in Article 8(1) and (2), and Article 10(1) of that Directive. To ensure that Member States do not go beyond that Directive and to avoid the creation of a fragmented regulatory landscape resulting in legal uncertainty and unnecessary burden, the full harmonisation provisions of Directive (EU) 2024/1760 should be expanded to additional provisions regulating the core aspects of the due diligence process. That includes, in particular, the provisions on scope, definitions, due diligence at group level, identification duty, the duties to address adverse impacts that have been or should have been identified, prioritisation, the duties to engage with stakeholders in certain cases, and the duty to provide for a complaints and notification mechanism, supervisory authorities and their powers, and the substantiated concerns procedure.

Added:Recital 14 a (new): (14 a) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to take into account the difficulties undertakings may encounter in gathering information from actors throughout their value chain. In knowledge of recent attempts from third countries to block the sharing of data from non-EU countries to EU companies, Member States should allow information required by this Directive, in exceptional cases where an undertaking in a non-EU third country could be sanctioned due to third-country legislation simply by transmitting sustainability data, to replace the information not provided by the undertaking of a non-EU third country by default values. This default value, which is calculated or drawn from secondary data, should represent an estimation of the average value for an indicator, for a specific country and sector. When such default values are not available, Member States should allow information not to be disclosed if there is a danger of sanctions due to third-country legislation.

Removed:Recital 21: (21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To ensure effectiveness, reduce burdens on companies that have to comply with that obligation and ensure that their resources are used purposefully, the required due diligence should, as a general rule, be limited to the company’s own operations, those of its subsidiaries and those of its direct business partners (‘tier 1’). Consequently, when it comes to business relationships, while taking into account relevant risk factors, including company-level risk factors, such as whether the business partner is not a company covered by this Directive, business operation risk factors, geographic and contextual risk factors, such as the level of law enforcement with respect to the type of adverse impacts; product and service risk factors, and sectoral risk factors, companies should, after the scoping, be required to carry out further assessments of their own operations, those of their subsidiaries and, where related to their chains of activities, those of their direct business partners, in the areas where adverse impacts were identified to be most likely to occur and most severe. Companies should, however, look beyond their direct business relationships where they have plausible information that suggests an adverse impact at the level of an indirect business partner. Plausible information means information …

Added:Recital 15: (15) Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements in Articles 19a and 29a of that Directive to prepare their management report, or consolidated management report, where applicable, in the electronic reporting format specified in Article 3 of Commission Delegated Regulation (EU) 2019/81511 and to mark up their sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council12 , in accordance with the electronic reporting format to be specified in that Delegated Regulation. To provide clarity to undertakings, it should be specified that until such rules on the marking up of sustainability reporting are adopted by way of that Delegated Regulation undertakings should not be required to mark-up their sustainability reporting.

Removed:Recital 22: (22) To limit the trickle-down effect on small and medium-sized undertakings and small midcap companies when it comes to the scoping of the chain of activities to identify adverse impacts, companies within the scope should not seek to obtain information from their business partners but rely only on information that is already reasonably available such as publicly known information, information from searches and information gained through earlier cooperation. Entity-level information is not relevant at this stage, nor is any communication with business partners. It should only be possible to seek such information for further assessments under certain conditions. In such a case, it should be possible to seek information from direct business partners with fewer than 3000 employees that exceeds the information specified in the standards for voluntary use only where, following a risk-based approach, such information is necessary in light of indications of likely adverse impacts or because the standards do not cover relevant impacts and where such additional information cannot reasonably be obtained by other means, mainly from existing or secondary sources. The same should apply where companies are required to look beyond their direct business partners because they have plausible information suggesting an adverse impact at the level of an indirect business partner. In order to facilitate compliance for companies and the relevant business partners, it should be possible to obtain th…

Added:Recital 16: (16) Article 33(1) of Directive 2013/34/EU specifies that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that certain documents are drawn up and published in accordance with the requirements of that Directive. To provide flexibility for undertakings and reduce their reporting burden, Member States can provide that the collective responsibility of the members of the administrative, management and supervisory bodies of an undertaking for compliance with the requirements of Article 29d of that Directive as regards the digitalisation of the management report is limited to its publication in the single electronic format, including the marking up of the sustainability reporting therein.

Removed:Recital 22 a (new): (22a) While keeping with the objective of prioritising the most adverse and likely impacts, companies should be given significant flexibility in deciding which risks to address first on the basis of the severity and likelihood of an adverse impact. Such a decision should be based on the scale, scope or irremediable character of the adverse impact, taking into account the gravity of the impact. Once the most severe and likely adverse impacts are addressed in reasonable time, companies should address less severe and less likely adverse impacts. However, companies should not be penalised for any harm stemming from less significant adverse impacts that were not yet addressed according to the prioritisation in line with these principles.

Added:Recital 17: (17) Pursuant to Article 40a(1), fourth and fifth subparagraphs of Directive 2013/34/EU, a subsidiary in the Union of a third-country undertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the third-country parent undertaking. For reasons of consistency and burden reduction, and in order to ensure a level playing field, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking and the branch should be set at a net turnover of more than EUR 450 000 000.

Removed:Recital 23: (23) Companies may find themselves in situations where their production heavily relies on inputs from one or several specific suppliers. At the same time, where the business operations of such a supplier are linked to severe adverse impacts, including child labour or significant environmental harm, and the company has unsuccessfully exhausted all due diligence measures to address those impacts, the company, as a last resort should suspend the business relationship while continuing to work with the supplier towards a solution, where possible using any increased leverage resulting from the suspension. Such a suspension should not lead to a substantial prejudice for the company, including where crucial business partners provide raw materials, products or services which are essential to the company’s business. Substantial prejudice should be interpreted as a negative and significant effect on the company’s legal, financial or economic situation or its production capacity, including in the long term, such as an effect giving rise to the likelihood of insolvency. In order not to undermine the aims of this Directive, the decision not to suspend the business relationship should be subject to conditions, including reporting to the competent supervisory authority about the duly justified reasons for such a decision. Companies should also assess if the adverse impacts from suspension can be reasonably expected to be manifestly more severe than the adverse impact that could not be preven…

Added:Recital 18: (18) Article 5(2), first subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2013/34/EU, with different dates depending on the size of the undertaking concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only undertakings with more than 1000 employees and a net turnover of EUR 450 000 000 on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be removed.

Removed:Recital 25: (25) To reduce administrative burdens on companies, the Commission’s deadline for the adoption of general due diligence guidelines should be advanced to 26 July 2026. In parallel, the application deadline for Directive (EU) 2024/1760 for the first group of companies should be deferred to 26 July 2028 in accordance with Directive (EU) XXX/XXX13. That two-year interval should provide companies with sufficient time to take into account the practical guidance and best practices included in the Commission’s guidelines when implementing due diligence measures.

Added:Recital 19: (19) Article 5(2), third subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2004/109/EC, with different dates depending on the size of the issuer concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only undertakings with more than 1000 employees and a net turnover of EUR 450 000 000 on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings should be removed.

Removed:Recital 26: (26) The provisions of Directive (EU) 2024/1760 on the transition plan for climate change have been deemed to be disproportionate, particularly due to the administrative burden on companies and competent authorities, and could lead to legal uncertainty. It is necessary to repeal those provisions in order to streamline obligations and support a more targeted and efficient implementation of that Directive.

Added:Recital 20: (20) Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing, in their national law, provisions within the field covered by the Directive laying down human rights and environmental due diligence obligations diverging from those laid down in Article 8(1) and (2), and Article 10(1) of that Directive. To ensure that Member States do not go beyond that Directive and to avoid the creation of a fragmented regulatory landscape resulting in legal uncertainty and unnecessary burden, the full harmonisation provisions of Directive (EU) 2024/1760 should be expanded to additional provisions regulating the core aspects of the due diligence process. That includes, in particular, the provisions on due diligence at group level, identification duty, the duties to address adverse impacts that have been or should have been identified, prioritisation, the duties to engage with stakeholders in certain cases, and the duty to provide for a complaints and notification mechanism. At the same time, Member States should continue to be allowed to introduce or maintain provisions of national law regulating specific adverse impacts or specific sectors of activity, specific products or services, in order to achieve a different level of protection of human, employment and social rights, the environment or the climate.

Removed:Recital 29 a (new): (29a) In order to facilitate compliance by companies with reporting and due diligence obligations under Union law, and to enhance the accessibility and usability of sustainability-related information, the Commission should establish a dedicated digital reporting portal. That portal should serve as a one-stop shop, providing companies, free of charge, with tailored access to templates, reporting requirements, and information on funding and tendering opportunities. To ensure the effective functioning of the portal, the Commission should promote the interoperability of existing data platforms, enabling seamless transmission, exchange and analysis of data. Furthermore, and in view of the rapid technological developments, the Commission should assess the potential of technological solutions, including the use of trustworthy artificial intelligence in accordance with Regulation (EU) 2024/1689 of the European Parliament and of the Council1a to support the digitalisation of reporting and improve the quality and accessibility of sustainability-related data. / 1a Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024 laying down harmonised rules on artificial intelligence and amending Regulations (EC) No 300/2008, (EU) No 167/2013, (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1139 and (EU) 2019/2144 and Directives 2014/90/EU, (EU) 2016/797 and (EU) 2020/1828 (Artificial Intelligence Act) (OJ L, 2024/1689, 12.7.2024, ELI: http://data.europa.eu/eli/reg/2024…

Added:Recital 21: (21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To ensure effectiveness, reduce burdens on companies that have to comply with that obligation and ensure that their resources are used purposefully, the required due diligence and measures taken should take into account relevant risk factors, including company-level risk factors, such as whether the business partner is not a company covered by this Directive, business operation risk factors, geographic and contextual risk factors, such as the level of law enforcement with respect to the type of adverse impacts; product and service risk factors, and sectoral risk factors. Companies should carry out the scoping to identify general areas where adverse impacts are most likely to occur and to be most severe. Based on the results of scoping the companies should be required, where on the basis of relevant and verifiable information the company has grounds to believe that adverse impacts have arisen or may arise, to carry out further assessments only in areas where adverse impacts were identified to be most likely to occur and most severe.

Added:Recital 22: (22) To limit the trickle-down effect on other companies, including small and medium-sized undertakings and small midcap companies when it comes to the scoping of the chain of activities to identify adverse impacts, companies within the scope should not seek to obtain information from their business partners but rely only on information that is already reasonably available, such as publicly known information, information from searches and information gained through earlier cooperation. Entity-level information and communication with business partners is not relevant at this stage. It should only be possible to seek such information for further assessments under certain conditions. In such a case, it should be possible to seek information from business partners only where, following a risk-based approach, such information is necessary in light of indications of likely adverse impacts from business partners with fewer than 5000 employees where such additional information cannot reasonably be obtained by other means, mainly from existing or secondary sources. In any case, any request should be targeted, reasonable and proportionate. In order to facilitate compliance for companies and the relevant business partners, it should be possible to obtain the necessary information either individually or collaboratively.

Added:Recital 22 a (new): (22 a) While keeping with the objective of prioritising the most adverse and likely impacts, companies should be given significant flexibility in deciding which risks to address first on the basis of the severity and likelihood of an adverse impact. Such a decision should be based on the scale, scope or irremediable character of the adverse impact, taking into account the gravity of the impact. Once the most severe and likely adverse impacts are addressed in reasonable time, companies should address less severe and less likely adverse impacts. However, companies should not be penalised for any harm stemming from less significant adverse impacts that were not yet addressed according to the prioritisation in line with these principles.

Added:Recital 23: (23) Companies may find themselves in situations where their production heavily relies on inputs from one or several specific suppliers. At the same time, where the business operations of such a supplier are linked to severe adverse impacts, including child labour or significant environmental harm, and the company has unsuccessfully exhausted all due diligence measures to address those impacts, the company, as a last resort should temporarily suspend the business relationship while continuing to work with the supplier towards a solution, where possible using any increased leverage resulting from the suspension. The company should assess, in consultation with relevant stakeholders, whether such suspension leads to a substantial prejudice for the company, including where crucial business partners provide raw materials, products or services which are essential to the company’s business to which no available alternative exists. Substantial prejudice should be interpreted as a negative and significant effect on the company’s legal, financial or economic situation or its production capacity, including in the long term, such as an effect giving rise to the likelihood of insolvency. In order not to undermine the aims of this Directive, the decision not to suspend the business relationship should be subject to conditions, including reporting to the competent supervisory authority about the duly justified reasons for such a decision. Companies should also assess if the adverse impacts …

Added:Recital 24: (24) To reduce burdens on companies and make stakeholder engagement more proportionate, companies should only have to engage with their employees, the employees of their subsidiaries and of their business partners, the representatives of those employees including trade unions, and individuals and communities whose rights or interests are or could be directly affected by the adverse impacts on human rights and the environment that stem from the products, services and operations of the company, its subsidiaries and its business partners. In line with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, this includes the legitimate representatives of those individuals or communities. They play an important role for communities, such as indigenous peoples or local communities, but can also be relevant for individuals, in particular in situations where it is not possible or appropriate to engage directly with individual rightsholders, or not all of them. For instance, it may be difficult to reach out to certain rightsholders, due to, for example, communication barriers, but especially in situations where their security cannot be guaranteed (such as in conflict areas or if rightsholders fear reprisals) or there is a serious lack of trust. Legitimate representatives might for instance be community leaders, the individuals or bodies representing indigenous peoples in accordance with their organisational rules and traditions (e.g., elected elders), consum…

Added:Recital 25: (25) To reduce administrative burdens on companies, the Commission’s deadline for the adoption of general due diligence guidelines should be advanced to 26 July 2026. In parallel, the application deadline for Directive (EU) 2024/1760 for the first group of companies should be deferred to 26 July 2028 in accordance with Directive (EU) XXX/XXX 13 . That two-year interval should provide companies with sufficient time to take into account the practical guidance and best practices included in the Commission’s guidelines when implementing due diligence measures.

Added:Recital 26: (26) The requirement to put into effect the transition plan for climate change mitigation should be replaced by a clarification that companies adopt a transition plan which aims to ensure, through reasonable efforts, that the business model and strategy of the company are compatible with the transition to a sustainable economy. Member States should ensure that this obligation is an obligation of means, not an obligation of results. The obligation to adopt the plan remains subject to administrative supervision.

Added:Recital 27: (27) Article 27(1) of Directive EU 2024/1760 requires Member States to lay down penalties that are to be “effective, proportionate and dissuasive”. Article 27(2) of that Directive requires Member States, when deciding whether to impose penalties and, if so, when determining their nature and appropriate level, to take due account of a series of factors that determine the gravity of the infringement and attenuating or aggravating circumstances. Article 27(4) of that Directive requires Member States to base any imposed pecuniary penalties on the net worldwide turnover of the company concerned. In order to ensure proportionate penalties, Member States should guarantee that the maximum limit for pecuniary penalties is set at 5% of the net worldwide turnover of the company or, for companies falling under Article 2(1)(b) and Article 2(2)(b), of the consolidated worldwide turnover of the ultimate parent undertaking, in the financial year preceding that of the decision to impose the fine. Moreover, to harmonise enforcement practices across the Union, the Commission, in collaboration with the Member States, should develop guidelines to assist supervisory authorities in determining the appropriate level of penalties.

Added:Recital 29 a (new): (29 a) In order to facilitate compliance by companies with reporting and due diligence obligations under Union law, and to enhance the accessibility and usability of sustainability-related information, the Commission should establish a dedicated digital reporting portal. That portal should serve as a one-stop shop, providing companies, free of charge, with tailored access to templates, guidelines, reporting requirements, including voluntary tools, and information on funding and tendering opportunities. To ensure the effective functioning of the portal, the Commission should promote the interoperability of existing data platforms, enabling seamless transmission, exchange and analysis of data, as well as complementarity with the European Single Access point. Furthermore, and in view of the rapid technological developments, the Commission should assess the potential of technological solutions, including the use of trustworthy artificial intelligence in accordance with Regulation (EU) 2024/1689 of the European Parliament and of the Council1 to support the digitalisation of reporting and improve the quality and accessibility of sustainability-related data. / 1 Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024 laying down harmonised rules on artificial intelligence and amending Regulations (EC) No 300/2008, (EU) No 167/2013, (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1139 and (EU) 2019/2144 and Directives 2014/90/EU, (EU) 2016/797 and (EU) 2020…