Major Recalibration of EU Sustainability Rules – Omnibus l Deal Reached

The European Parliament and Council have reached a provisional political agreement on the Omnibus l simplification package, making a pivotal shift in the EU’s corporate sustainability framework.

Driven by the new “Competitiveness Compass” and the Draghi Report’s call to unlock productivity, this agreement fundamentally alters the scope and obligations under the CSRD and CSDDD.

Here is the breakdown of the deal secured on 8-9 December 2025:

Massive re-scoping 

The “simplification” has resulted in significantly elevated thresholds, effectively exempting an estimated 90% of companies previously in scope of the CSRD.

1. CSDDD (due diligence): Thresholds raised to companies with >5,000 employees AND >€1,5bn net turnover. This leaves only about 1,600 of the largest EU enterprises in scope.
2. CSRD (reporting): Mandatory reporting now kicks in at >1,000 employees AND >€450m turnover.
3. Exemptions: Listed SMEs and financial holding undertakings are explicitly removed from scope.

Substantive rollbacks 

Beyond the thresholds, core obligations have been deleted or diluted to cut “red tape”.

1. Climate transition plans: The CSDDD requirement to adopt and implement Paris-aligned transition plans has been deleted. While reporting on plans remains under CSRD (if material), the due diligence enforcement mechanism is gone.
2. Civil liability: The harmonised EU civil liability regime has been removed. Liability reverts to national law, reintroducing fragmentation risks.
3. Voluntary Standards: Sector-specific reporting under CSRD is now voluntary, and value-chain data points can be estimated rather than primarily collected.

The “Trickle-Down” data barrier

A critical operational challenge has emerged. The agreement protects smaller entities (<1,000 employees) by allowing them to refuse reporting information beyond voluntary SME standards.

1. The compliance trap: Large in-scope companies are still required to perform due diligence and double materiality assessments. However, their ability to demand granular data from suppliers is now legally restricted.
2. Strategic shift: Procurement teams will likely need to bypass this statutory protection via private contractual obligations to secure necessary data.

New Timeline 

The transposition deadline for the CSDDD has been extended to July 2028, with application starting in July 2029.

This is widely seen as a “U-turn” on the Green Deal’s regulatory pillars, prioritising immediate competitiveness over broad mandatory accountability.

Prior to being published in the Official Journal of the EU and entering into force, the provisional agreement must receive formal approval from both the Parliament and the Council.