Simplification of EU Sustainability Rules – Emissions Reporting for Lessors Clarified Following Leaseurope Action

At the beginning of December 2025, the European Parliament and the Council of the EU reached a provisional agreement on the Commission proposal for a Directive amending the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) as regards certain corporate sustainability reporting and due diligence requirements. The EP in plenary session formally adopted the agreed text on 16 December 2025. The Council, at Ministers configuration, can now adopt the provisional agreement. Once formally adopted, the text will be published in the EU Official Journal. After its publication, it would enter into force on the twentieth day following its publication.

The proposal amending the CSRD and the CSDDD were part of the first Omnibus package – “Omnibus I” – proposed by the European Commission aiming at simplifying corporate sustainability and due diligence reporting requirements.

The key points of the simplification as laid down in the agreement are the following:

• Corporate Sustainability Reporting Directive (CSRD) 
• Scope. CSRD will apply to companies with more than 1,000 employees and a net turnover above EUR 450 million. Listed SMEs are removed from the scope. Also, CSRD will apply to third-country companies with a net turnover above EUR 450 million. Third-party subsidiaries and branches will have to comply with reporting obligations when their balance sheet exceeds EUR 200 million.
• Information requests from smaller companies. For undertakings not subject to mandatory sustainability reporting requirements, there will a voluntary standard. Such undertakings will have the right to decline to provide information beyond what is set out in this standard.
• Sector-specific reporting. There will be no sector-specific standards. The European Commission will provide guidance to help identify sustainability matters likely to be material for a typical undertaking operating in a given sector.
• Transition period. The first 3 years of being subject to the CSRD, in-scope companies will have a “comply or explain” obligation in the case that not all the necessary information regarding the value chain is available. After that three-year transition period, the companies will have to meet the reporting requirements for value chain information by using information directly obtained from undertakings in their value chain or estimates for that information.
• Assurance. The requirement for reasonable assurance is removed. Auditors and audit firms should carry out the assurance of sustainability reporting in compliance with limited assurance (stating in a negative form that no matter has been identified to conclude that the subject matter is materially misstated).

• Corporate Sustainability Due Diligence Directive (CSDDD) 
• Scope. CSDDD will apply to companies with more than 5,000 employees with a net turnover above EUR 1.5 billion.
• Due diligence obligation. Companies will have to adopt a risk-based approach to identify and assess actual and potential adverse impacts. The risk-based approach means that companies will take into account possible relevant risk factors, including products and services offered, business partners, geography, and relevant legal requirements. Companies should no longer be required to carry out a comprehensive mapping exercise but instead conduct a more general scoping exercise based on reasonably available information (information which can be obtained by the company from its own, or from existing or secondary sources without contacting a business partner). Companies will focus on the areas of their chains of activities where actual and potential adverse impacts are most likely to occur or to be most severe.
• Based on the results of the scoping exercise, companies will have to carry out an in-depth assessment in the areas where adverse impacts were identified to be most likely to occur and most severe. For in-depth assessment, companies should not ask information directly from their business partners with fewer than 5,000 employees, unless information cannot reasonably be obtained by other means.
• Transition plan. The obligation for companies to adopt a transition plan for climate change mitigation has been removed from the CSDDD. However, under the CSRD there is still the requirement for companies to report on any transition plans for climate change mitigation which aim to ensure that the business model and strategy of the company are compatible with the Paris Agreement and the objective of achieving climate neutrality.
• Other. A digital reporting portal will be set up to serve as a one-stop-shop for companies to have free access to templates, guidelines, and information on reporting requirements. EU-wide civil liability regime is removed. The review clause on the necessity of laying down additional sustainability due diligence requirements for financial services undertakings is deleted.
• Implementation time. The deadline for transposing the CSDDD is postponed by a year,  to 26 July 2028. Companies will have to comply with the new measures by July 2029.

In parallel, the European Financial Reporting Advisory Group (EFRAG) published on 3 December 2025 a simplified set of the European Sustainability Reporting Standards (ESRS), following the Commission’s request. The aim of the Amended ESRS is to clarify provisions that are deemed unclear, foster consistency with other pieces of EU legislation and provide instructions on how to apply the materiality principle under the CSRD.

Leaseurope has been following actively the developments on the simplifications of sustainability requirements, particularly through the work of the dedicated Task Force on ESG & Green Leasing and engaged regularly with EFRAG in view of the expected adoption of the Amended ESRS.

The Amended ESRS does provide key new guidance for leasing in line with Leaseurope’s contributions. Firstly, they confirm that for most leases, the lessee will report Impacts, Risks and Opportunities (IROs) of leased assets as Scope 1 and Scope 2, and the lessor will report as Scope 3.  This is regardless of the type of lease (i.e. finance lease, operating lease or right-of-use lease). Secondly, they clarify that the above key rule for leasing takes precedence over other parts of the Amended ESRS. This includes a section of ESRS E1 that deals with reporting boundaries as well as over ‘other topical standards’ (GHG Protocol Corporate Accounting and Reporting Standard). Finally, as Leaseurope also called for, where firms have material Impacts, Risks and Opportunities in their upstream and downstream value chains, there are more flexible rules allowing the use of estimates, reducing the pressure for direct data collection from counterparties.

As a next step, the European Commission is expected within 2026 to adopt the amended ESRS through a delegated act, subject to any objections following the European Parliament and the Council scrutiny.

For more information, please contact Stella Mitta at s.mitta [at] leaseurope.org