EU Parliament Approves Omnibus I Package to Scale Back Sustainability Regulations

On December 16, 2025, the European Parliament approved the Omnibus I package, a significant legislative reform that reduces the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The agreement, which passed with 428 votes in favor, 218 against, and 17 abstentions, aims to simplify compliance requirements for businesses while maintaining some sustainability objectives. The package now awaits formal approval from the Council of the European Union before it can enter into force.

EU Parliament Approves Omnibus I Package to Cut Sustainability Reporting and Due Diligence RulesESG DiveEU Parliament Approves Omnibus Agreement to Cut Sustainability Reporting and Due Diligence RequirementsMEPs back scaling back of EU sustainability reporting and due diligence rulesNational Law ReviewWhat changes does the Omnibus law bring to CSDDD and CSRD?

The revised CSRD will now apply only to companies with more than 1,000 employees and a net annual turnover exceeding €450 million, effectively removing around 90% of firms from mandatory sustainability reporting. Non-EU companies will also be subject to the same thresholds if they operate within the EU market. The CSDDD has seen even more drastic changes, with due diligence obligations now limited to companies with over 5,000 employees and €1.5 billion in revenue, with enforcement delayed until July 2029.

EU Parliament Approves Omnibus I Package to Cut Sustainability Reporting and Due Diligence RulesWhat changes does the Omnibus law bring to CSDDD and CSRD?EU Parliament Approves Omnibus Agreement to Cut Sustainability Reporting and Due Diligence RequirementsMEPs back scaling back of EU sustainability reporting and due diligence rulesNational Law Review

The new regulations also introduce a "value chain cap," limiting the information that larger companies can request from smaller suppliers, which are defined as those with fewer than 1,000 employees. This aims to prevent larger firms from shifting reporting burdens onto smaller entities.

EU Parliament Approves Omnibus Agreement to Cut Sustainability Reporting and Due Diligence Requirements

Critics, including environmental and human rights organizations, have condemned the changes as a "betrayal" of communities affected by corporate practices. They argue that the reductions in oversight will weaken protections for human and ecological rights and diminish accountability for corporate impacts. Nele Meyer, director of the European Coalition for Corporate Justice, stated, “Today’s vote is a betrayal of people and communities suffering from corporate abuse around the world.”

The Guardian

Conversely, supporters of the Omnibus I package, including Jörgen Warborn, a Swedish Member of the European Parliament (MEP) from the European People’s Party (EPP), argue that the reforms represent an important step toward reducing regulatory burdens for businesses while still aiming to achieve sustainability goals. Warborn emphasized that the vote delivers "historic cost reductions" and reflects the concerns of job creators across Europe.

MEPs back scaling back of EU sustainability reporting and due diligence rules

There are discrepancies regarding the extent of the impact these changes will have on corporate accountability. While proponents claim the reforms will streamline compliance and maintain sustainability objectives, critics assert that the cuts will significantly undermine protections for vulnerable communities and the environment. Additionally, procedural shortcomings in the preparation of the Omnibus proposals have been highlighted by the European Ombudsman, raising concerns about the legislative process.

EU Parliament Approves Omnibus I Package to Cut Sustainability Reporting and Due Diligence Rules

Following the European Parliament's approval, the Omnibus I package must receive formal sign-off from the Council of the European Union. Once adopted, the revised rules will be published in the EU’s Official Journal and will enter into force 20 days later. The implementation of these changes will require companies to reassess their reporting obligations and prepare for the new thresholds and requirements set to take effect in 2029.

EU Parliament Approves Omnibus I Package to Cut Sustainability Reporting and Due Diligence Rules

• “Today’s vote is a betrayal of people and communities suffering from corporate abuse around the world,” — Nele Meyer, Director, European Coalition for Corporate Justice

The Guardian

• “Parliament has listened to the concerns expressed by job creators across Europe,” — Jörgen Warborn, MEP, European People’s Party

The Guardian