The S-factor of Omnibus I: Key takeaways from an HR compliance perspective on the overhaul of CSRD and CSDDD

On 13 November 2025, the European Parliament adopted its negotiating position on the first Omnibus Package with 382 votes in favour and 249 against. This vote marks the most ambitious attempt so far to scale back the EU’s sustainability legislation. If implemented, it would significantly reduce both the number of companies subject to the Corporate Sustainability Reporting Directive (‘CSRD’) and the obligations under the Corporate Sustainability Due Diligence Directive (‘CSDDD’). Trilogue negotiations are starting, and a political agreement is expected before the end of the year.

What are CSRD and CSDDD?~

CSRD is the EU’s framework requiring large companies to report on their environmental, social impacts, as well as on governance (ESG) matters. CSDDD requires companies to identify and address human-rights and environmental risks in their operations and value chain. Both directives are part of the EU’s Green Deal and have been adopted after years of fierce debates in the European Parliament and Council.

Importantly, being directives, CSRD and CSDDD require transposition into national law by EU Member States before creating direct obligations for companies. As of now, CSRD rules are partially in effect for the first wave of companies, while CSDDD transposition is generally paused awaiting the outcome of the Omnibus process. This pause creates uncertainty for HR departments that must continue preparing internal systems for social data collection without knowing the full scope of their future due diligence and reporting obligations.

The Omnibus-I initiative

In February 2025, the Commission launched the so-called Omnibus-I package in relation to the ESG regulatory requirements. The Omnibus-I package contains 2 separate legal proposals for revision of CSRD and CSDDD. The first proposal was aimed at postponement (‘stop the clock’) and has been adopted (Directive (EU) 2025/794), the second proposal contains the simplification revisions of CSRD, CSDDD and CBAM and this is the proposal that is currently subject of the debates in EP and Council. See our blog: Omnibus I Simplifying or overhauling the EUs Sustainability Regime - Bird & Bird. The aim is to finalize the revision of the CSRD/CSDDD legislation by the end of 2025. (See our blog: Next station for the Omnibus I Package: Entering Trilogue Negotiations with the EP's Compromise).

Why these changes?

The Omnibus-I package is a direct reaction to the Draghi Report, which warned that the EU is rapidly losing competitiveness and that regulatory burden has become an obstacle to innovation and long-term investments. It also follows increasingly widespread concerns from companies about excessive administrative burdens and associated compliance costs. The stated objective of the Omnibus Package is to reduce compliance obligations by at least 25% for large companies and 35% for SMEs and reduce the personal scope (the thresholds for companies being subject to the obligations) by 80% or even 90%. The Omnibus Package affects multiple pieces of EU legislation beyond CSRD and CSDDD, signaling a fundamental recalibration of the EU’s regulatory approach. 

Personal scope reductions – employee count

The European Parliament proposes that CSRD should apply only to companies with more than 1,750 employees and more than €450 million turnover, which would reduce its remit to roughly 10% of companies currently in scope. The Council, however, supports a lower threshold of more than 1,000 employees and €450 million turnover. For HR teams, it is important to note that the CSRD employee threshold is calculated on the basis of average full-time equivalents (FTEs) at consolidated group level, meaning that part-time staff, international subsidiaries included in the financial consolidation, and seasonal peaks may significantly affect whether a company falls within scope. Only employees counted under national accounting rules are included.

In contrast, for CSDDD, the Parliament accepts the 5,000-employee / €1,5 billion turnover singles threshold (instead of 3 thresholds gradually phasing in until 2030). To check if the threshold is met, the CSDDD uses a broader, labour law-oriented definition: all employees must be counted, including part-time, seasonal, temporary agency workers, and other non-standard workers who qualify as “workers” under EU law. Moreover, the thresholds must be met for two consecutive financial years to trigger due diligence obligations. This inclusive approach generally captures more workers than CSRD and reflects the directive’s focus on human rights and social risks in the workforce. The overall reduction of the CSDDD’s scope is however expected to be much smaller than for CSRD and is estimated at around 15–20%. 

The new “Value Chain Cap”

A key innovation for both CSRD and CSDDD is the introduction of a “Value Chain Cap”. Under this approach, large companies may only request information from business partners that aligns with the future voluntary SME sustainability reporting standards (VSME) or with information that is “commonly used in the sector”. In practice, this should greatly reduce the volume and complexity of data that SMEs are asked to provide within the value chain. The position of the European Parliament increases the employee threshold for value chain partners to >1,750 employees and a net turnover requirement of 450 million. Furthermore, the EP position includes additional requirements to explain efforts made to obtain value chain information.

HR reporting topics under CSRD

For the companies that remain in scope of CSRD, the core European Sustainability Reporting Standards (ESRS) continue to apply. These include HR-related topics such as working conditions, equal treatment, collective bargaining, training, and responsible restructuring. The ESRS’ “S” standards (S1 to S4), which cover the company’s own workforce (S1), workers in the value chain (S2), affected communities (S3), and consumers/end-users (S4), are where the proposed simplifications will most directly affect HR functions. 

Overall, the number of mandatory data points in these S-related areas will substantially be reduced. This is part of the Commission’s initiative to ‘cut the red tape’ by amending the Delegated Regulation 2023/772 and moving many data points to a voluntary regime. 

As a first step, the Commission adopted a so-called quick-fix amendment to this regulation (Delegated Regulation (EU) 2025/1416), reducing the burden on the first wave of (EU-based listed) companies that already comply with CSRD. The delegated act is adopted into EU law and the revised ESRS has become effective. The quick-fix amendment for the first wave of CSRD postpones mandatory reporting on several workforce-related metrics, including granular diversity indicators, detailed training hours by employee category, and certain social dialogue data, easing the immediate reporting burden. 

At the same time, the European Financial Reporting Advisory Group (EFRAG) is preparing revised, simplified ESRS for the Commission to adopt. The draft revisions indicate further streamlining, with reduced disclosure requirements for collective bargaining coverage, restructuring processes, and workforce turnover, reflecting a shift toward more narrative, less data-intensive reporting.  

As a result, HR departments should reassess which datasets require continuous monitoring and which can be deprioritised until the revised ESRS are finalised, while still maintaining a basic level of workforce and social data to avoid potential compliance gaps.

The Package also proposes to require no more than permanent “limited assurance” instead of the more burdensome “reasonable assurance.” This change is expected to significantly lower audit-related costs.

CSDDD: transition to a risk-based model

The revised CSDDD, in the variations proposed by the European Parliament and Council, shifts towards a more targeted risk-based approach. The focus is narrowed to high-impact operations and to tier-1 suppliers or business partners, especially in high-risk sectors. Notably, the obligation to establish a climate transition plan is deleted, stakeholder engagement requirements are significantly reduced, and the proposal no longer includes a harmonised EU-wide civil liability regime. Instead, civil liability for due diligence failure would occur exclusively at national level. Companies would also be required to conduct reviews every five years rather than annually.

For HR and compliance teams, the move to a strictly risk-based model fundamentally changes human-rights due diligence. Instead of broad annual assessments, companies will focus on identifying specific “salient risks” — such as forced labour, child labour, excessive working hours, or lack of freedom of association — primarily within tier-1 relationships. This will require HR departments to strengthen contractual HR-related clauses with suppliers, redesign escalation mechanisms for workforce-related grievances, and document adverse impacts more systematically, even if reporting obligations become lighter. 

In practice, HR teams will need to implement targeted monitoring systems, conduct periodic audits of high-risk suppliers, and collaborate closely with legal, sustainability, and procurement functions to triage risks and coordinate mitigation actions. Employee training programs may also need to be updated to ensure managers and local HR staff can identify and escalate potential human-rights issues, while internal reporting channels must be robust enough to capture incidents across borders. This shift emphasizes proactive risk prevention rather than mere compliance reporting, requiring HR to adopt a more strategic, integrated role in safeguarding workforce rights throughout the value chain.

It should be noted that the revision of the CSDDD may also have an impact on the Forced Labour Regulation, which will become applicable in all EU Member States as of 14 December 2027 but largely depends on the due diligence obligations in the CSDDD. 

Timeline following the 2025 delays

For CSRD, wave 1 companies (large public-interest entities with >500 employees) have already started to publish sustainability statements in accordance with the ESRS as of their Financial Year 2024 (released in 2025). The targeted 'quick fix' amendment has ensured that there will be no increased reporting burdens for FY2025-2026. Larger wave 1 companies (>750 employees) receive additional relief aligned with provisions for smaller companies.

For CSDDD, the transposition was already provision for by mid-2027, with first application by mid-2028 (starting with the largest companies). That will not change, but both the thresholds for the personal scope and the due diligence requirements may change significantly. As a result, most member states are pausing transposition until the Omnibus-I revision package has been decided on.

If Omnibus-I is adopted in early 2026, the higher thresholds would apply to the postponed CSRD waves 2, 3 and 4. As a result, many companies that were previously preparing to report will simply fall out of scope and no longer be subject to mandatory reporting. However, voluntary reporting in accordance with the new VSME may still be of interest or even required by stakeholders like investors, unions, employees etc.

CSRD wave 1 companies should continue collecting data and preparing sustainability statements. Companies in the later waves may pause intensive ESRS data collection efforts and full-scope CSRD assessments but should maintain basic social data collection (e.g., directors’ duties, investor-related information, contractual requirements). HR teams should therefore continue monitoring core workforce indicators such as headcount evolution, absenteeism, labour relations issues, restructuring processes and diversity metrics, as these areas are expected to remain central in the simplified ESRS even if the number of mandatory datapoints is reduced.

Remaining uncertainties and overall direction

Key elements remain open, including the final CSRD thresholds (likely between 1,000 and 1,750 employees) and CSDDD thresholds (which may move up to 5,000 employees), the scope of the Value Chain Cap, the remaining ESRS data points, and the precise risk triggers under CSDDD. Additional reductions to the scope or obligations of both directives cannot be excluded, especially given strong pressure from the business sector. For HR leaders, this evolving regulatory landscape reinforces the need to maintain agile systems for workforce data collection and to anticipate potential shifts in the information that investors, auditors and regulators may expect, even in a simplified framework.

The trend is unmistakable: far fewer companies will fall within scope, value-chain obligations will become much lighter, and overall compliance costs are expected to drop sharply. But the number of employees and the role of HR teams will be critical to decide which companies are in scope and what their obligations will be.

If you have any questions or would like to discuss the impact on your organisation, please feel free to reach out to our authors - Jehan de Wasseige, Pauline Kuipers, or Sander Wagemakers.