EU member states in the European Council voted on Tuesday to approve an agreement to significantly scale back sustainability reporting and due diligence requirements for companies under the “Omnibus I” simplification package.
The green light by EU states marks the last major step towards the final adoption of the new rules to dramatically cut back the number of companies covered by key pieces of sustainability legislation, including the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).
Dramatically Reduced Scope
The final Omnibus agreement went much farther in cutting sustainability reporting and due diligence obligations for companies than the package initially proposed by the European Commission in early 2025.
Under the new agreement:
- CSRD threshold raised to companies with more than 1,000 employees AND €450 million in annual revenues, removing an estimated 90% of companies
- CSDDD threshold raised to 5,000 employees and €1.5 billion in revenue, an even more drastic cut
- Removed CSDDD obligation for companies to prepare climate transition plans
- Eliminated EU-wide liability regime
- Lowered potential penalties to maximum cap of 3% of global revenues
- Delayed CSDDD compliance to July 2029
Supply Chain Impact
The agreement also limits the amount of information that companies under the scope of the regulations can request from smaller companies within their supply chains, allowing companies with under 1,000 employees to refuse to provide reporting information beyond that outlined in the voluntary sustainability reporting standard for SMEs (VSME).
In its statement announcing the approval, the EU Council highlighted the competitiveness benefits of the deal, noting that the package “reduces complexity and unnecessary barriers, cuts red tape, enhances efficiency and introduces more flexibility for companies that remain subject to its scope.”
Industry Response
Marilena Raouna, Deputy minister for European affairs for Cyprus, which currently holds the rotating Presidency of the Council, said: “With today’s decision, we are delivering on our commitment for a European Union which is more competitive. Through the package adopted, we are reducing unnecessary and disproportionate burdens on our businesses, with simpler, more targeted and more proportionate rules, both for our companies and our citizens.”
The decision comes after months of pressure from businesses and governments including the U.S. and Qatar, marking a significant policy shift in the EU’s approach to balancing sustainability and competitiveness.
